Chapter 1 – Performance Management and Reward Systems in Context
Learning Objectives
1.1 Explain the concept of performance management.
1.2 Distinguish performance management from performance appraisal.
1.3 Explain the many advantages and make a business case for implementing a
well-designed performance management system.
1.4 Recognize the multiple negative consequences that can arise from the poor
design and implementation of a performance management system. These
negative consequences affect all the parties involved: employees, supervisors,
and the organization as a whole.
1.5 Understand the concept of a reward system and its relationship to a
performance management system.
1.6 Distinguish among the various types of employee rewards including
compensation, benefits, and relational returns.
1.7 Describe the multiple purposes of a performance management system including
strategic, administrative, informational, developmental, organizational
maintenance, and documentation purposes.
1.8 Describe and explain the key features of an ideal performance management
system.
1.9 Create a presentation providing persuasive arguments in support of why an
organization should implement a performance management system, including
the purposes that performance management systems serve and the dangers of
a poorly implemented system.
,1.10 Note the relationship and links between a performance management system
and other HR functions including recruitment and selection, training and
development, workforce planning, and compensation.
Chapter Outline
Overview
1. Definition of Performance Management (PM)
2. The Performance Management Contribution
3. Disadvantages/Dangers of Poorly-Implemented PM Systems
4. Definition of Reward Systems
5. Aims and Role of PM Systems
6. Characteristics of an Ideal PM System
7. Integration with Other Human Resources and Development Activities
1. Definition of Performance Management (PM)
Continuous process of
Identifying performance of individuals and teams
Measuring performance of individuals and teams
Developing performance of individuals and teams
Aligning performance with the strategic goals of the organization
How did Sally’s behavior fit this description?
Let’s take a survey here. Raise your hand if your company’s performance review
system actually helps you to improve your performance. How does our class
compare with the Watson Wyatt 2006 finding that 30% of employees believe their
, company’s performance review system actually helps employees improve
performance?
PM is NOT performance appraisal
• PM
– Strategic business considerations
– Ongoing feedback
– So employee can improve performance
– Driven by line manager
• Performance appraisal
– Assesses employee
• Strengths
• Weaknesses
– Once a year
– Lacks ongoing feedback
– Driven by HR
2. The Performance Management Contribution
, For Employees
Clarify definition of job and success criteria
Increase motivation to perform
Increase self-esteem
Enhance self-insight and development
For Managers
Supervisors communicate views of performance more clearly
Managers gain insight about subordinates
There is better, more timely, identification of good and poor
performance
Employee performance improves
For Organization/HR Function
Clarify organizational goals
Facilitate organizational change
Administrative actions are more fair and appropriate
There is better protection from lawsuits
How did PM help IBM switch to a customer service focus in the 1980s?
3. Disadvantages/Dangers of Poorly-implemented PM Systems
Learning Objectives
1.1 Explain the concept of performance management.
1.2 Distinguish performance management from performance appraisal.
1.3 Explain the many advantages and make a business case for implementing a
well-designed performance management system.
1.4 Recognize the multiple negative consequences that can arise from the poor
design and implementation of a performance management system. These
negative consequences affect all the parties involved: employees, supervisors,
and the organization as a whole.
1.5 Understand the concept of a reward system and its relationship to a
performance management system.
1.6 Distinguish among the various types of employee rewards including
compensation, benefits, and relational returns.
1.7 Describe the multiple purposes of a performance management system including
strategic, administrative, informational, developmental, organizational
maintenance, and documentation purposes.
1.8 Describe and explain the key features of an ideal performance management
system.
1.9 Create a presentation providing persuasive arguments in support of why an
organization should implement a performance management system, including
the purposes that performance management systems serve and the dangers of
a poorly implemented system.
,1.10 Note the relationship and links between a performance management system
and other HR functions including recruitment and selection, training and
development, workforce planning, and compensation.
Chapter Outline
Overview
1. Definition of Performance Management (PM)
2. The Performance Management Contribution
3. Disadvantages/Dangers of Poorly-Implemented PM Systems
4. Definition of Reward Systems
5. Aims and Role of PM Systems
6. Characteristics of an Ideal PM System
7. Integration with Other Human Resources and Development Activities
1. Definition of Performance Management (PM)
Continuous process of
Identifying performance of individuals and teams
Measuring performance of individuals and teams
Developing performance of individuals and teams
Aligning performance with the strategic goals of the organization
How did Sally’s behavior fit this description?
Let’s take a survey here. Raise your hand if your company’s performance review
system actually helps you to improve your performance. How does our class
compare with the Watson Wyatt 2006 finding that 30% of employees believe their
, company’s performance review system actually helps employees improve
performance?
PM is NOT performance appraisal
• PM
– Strategic business considerations
– Ongoing feedback
– So employee can improve performance
– Driven by line manager
• Performance appraisal
– Assesses employee
• Strengths
• Weaknesses
– Once a year
– Lacks ongoing feedback
– Driven by HR
2. The Performance Management Contribution
, For Employees
Clarify definition of job and success criteria
Increase motivation to perform
Increase self-esteem
Enhance self-insight and development
For Managers
Supervisors communicate views of performance more clearly
Managers gain insight about subordinates
There is better, more timely, identification of good and poor
performance
Employee performance improves
For Organization/HR Function
Clarify organizational goals
Facilitate organizational change
Administrative actions are more fair and appropriate
There is better protection from lawsuits
How did PM help IBM switch to a customer service focus in the 1980s?
3. Disadvantages/Dangers of Poorly-implemented PM Systems
