TOPIC 1 - INTRODUCTION TO PM
PERFORMANCE MANAGEMENT
DENISI & SMITH (2014) PA, PM AND FIRM-LEVEL PERFORMANCE
Definition
Performance management A continuous process of identifying, measuring, and developing the
performance of individuals and teams and aligning performance with the
strategic goals of the organization
Purposes
Strategic You want your employees to know the tactic and strategic goals (where to go)
Administrative You want to have input and information for the appraisal
Communication Channels where to communicate with your employees to know what is important,
sharing organizational goals and if these are aligned with individual goals
Developmental Who needs development or training? What are the strengths of the organization? Do
these strengths align with the organizational goals?
Data collection
Organizational maintenance You know the position of your organization when you collect data
Documentation Information that helps you document for legislation (e.g. employees who do
not perform well when you want to say goodbye, you have documentation
that proves this)
Perspectives
Advantages of Performance Management
Employees Managers Organization / HR
Increased self-esteem Develop a workforce with More appropriate administrative
motivation to perform actions
Understand required behavior Gain greater insight into More clear organizational goals
and results of their position employees and making them
more competent
Maximize strengths and minimize Differentiation between poor and Reduced employee conduct
weaknesses good performers
Clearer communication about Better protection from lawsuits
performance
Facilitate organizational change /
maintenance
Develop increased commitment
and engagement of employees
,Disadvantages of Performance Management
Employees Managers Organization / HR
Lowered self-esteem Increased turnover Wasted time and money
Burnout and dissatisfaction Decreased motivation of Unclear rating and emerging
employees biases
Damaged relationships Unfair standards and ratings Increased risk of legislation
DIFFERENCES PM AND PA
Performance management Continuous process of identifying, measuring and developing the
performance of individuals and teams and aligning performance with
strategic goals of the organization
Performance appraisal Process by which we evaluate the individual performance over some period
of time
Performance Management Performance Appraisal
Strategic business consideration Assesses employees’ strengths & weaknesses
Driven by managers Driven by HR
Ongoing feedback Once a year, lacks ongoing feedback
(so employee can improve performance)
DIFFERENT PERSPECTIVES
GRUMAN & SAKS (2010) PERFORMANCE MANAGEMENT AND EMPLOYEE ENGAGEMENT
Commitment strategy Engagement Performance Model (Gruman & Saks, 2010)
Gruman (2011) argues that one important way to enhance the Performance Management process is to focus
on fostering employee engagement as a driver of increased performance.
Engagement is often the key to an organisation’s success and competitiveness.
Three psychological conditions serve as antecedents for personal engagement:
1. Psychological meaningfulness One’s belief regarding how meaningful it is to bring oneself to a role
performance
2. Psychological safety One’s perception of how safe it is to bring oneself to a role
performance without fear of damage to self-image, status or career
3. Psychological availability One’s perception of how available one is to bring oneself into a
role
Performance agreement
Outlines what employees will be
expected to accomplish
(reviewing and goal setting)
Engagement facilitation
Focuses on job design and
facilitating the development of
engagement and psychological
capital
Performance and engagement appraisal and feedback
Focuses on
perceptions of justice & trust as drivers of engagement. Should
include an assessment of engagement behavior
, Then, performance agreement and engagement facilitation feed into employee engagement and subsequently
enhance job performance.
- The model is ongoing and continuous.
- Performance management processes should provide resources to employees that lead to the three
psychological conditions that are associated with higher levels of engagement.
Control strategy Management Control Systems (Merchant, 1982)
Management control is about taking steps to help ensure that the employees do what is best for the
organisation. A sound management control system stimulates action by spotting the significant variations from
the original plan and highlighting them for the people who can set things right.
- Control needs to focus on the results
CONTROL SYSTEMS
MERCHANT (1982) THE CONTROL FUNCTION OF MANAGEMENT
Basic control process
1. Establishing standards
2. Measuring performance against these standards
3. Correcting deviations from standards and plans
Why are controls needed?
Employees are sometimes unable or unwilling to act in the organisation’s best interest, and a set of controls
must be implemented to guard against undesirable behaviour and to encourage desirable actions
What is desired?
Three starting points:
1. Start form goals and objectives
2. Identify the key results (KR)
Lack of direction result control
3. Identify the key actions (KA)
Lack of direction action control
What is likely to happen?
Three issues:
1. Lack of direction
Do employees understand what they are expected to do (key actions) or to accomplish (key results)?
2. Lack of motivation
Are they properly motivated? Is there a congruence between the employees and organizational goals?
3. Personal limitations
Are they able to fulfil their desired roles?
What controls should be used?
If there is a discrepancy between what is desired and what is likely to happen, what controls should be used?
Consider:
- The total need for control
- The amount of control that can be designed
- The costs of the control and any unintended behavioral effect
By avoiding some behavioural problems and/or implementing one or more types of control to protect against
the remaining problems:
- Control-problem avoidance
- Action control (the actions taken)
- Results control (the results produced)
PERFORMANCE MANAGEMENT
DENISI & SMITH (2014) PA, PM AND FIRM-LEVEL PERFORMANCE
Definition
Performance management A continuous process of identifying, measuring, and developing the
performance of individuals and teams and aligning performance with the
strategic goals of the organization
Purposes
Strategic You want your employees to know the tactic and strategic goals (where to go)
Administrative You want to have input and information for the appraisal
Communication Channels where to communicate with your employees to know what is important,
sharing organizational goals and if these are aligned with individual goals
Developmental Who needs development or training? What are the strengths of the organization? Do
these strengths align with the organizational goals?
Data collection
Organizational maintenance You know the position of your organization when you collect data
Documentation Information that helps you document for legislation (e.g. employees who do
not perform well when you want to say goodbye, you have documentation
that proves this)
Perspectives
Advantages of Performance Management
Employees Managers Organization / HR
Increased self-esteem Develop a workforce with More appropriate administrative
motivation to perform actions
Understand required behavior Gain greater insight into More clear organizational goals
and results of their position employees and making them
more competent
Maximize strengths and minimize Differentiation between poor and Reduced employee conduct
weaknesses good performers
Clearer communication about Better protection from lawsuits
performance
Facilitate organizational change /
maintenance
Develop increased commitment
and engagement of employees
,Disadvantages of Performance Management
Employees Managers Organization / HR
Lowered self-esteem Increased turnover Wasted time and money
Burnout and dissatisfaction Decreased motivation of Unclear rating and emerging
employees biases
Damaged relationships Unfair standards and ratings Increased risk of legislation
DIFFERENCES PM AND PA
Performance management Continuous process of identifying, measuring and developing the
performance of individuals and teams and aligning performance with
strategic goals of the organization
Performance appraisal Process by which we evaluate the individual performance over some period
of time
Performance Management Performance Appraisal
Strategic business consideration Assesses employees’ strengths & weaknesses
Driven by managers Driven by HR
Ongoing feedback Once a year, lacks ongoing feedback
(so employee can improve performance)
DIFFERENT PERSPECTIVES
GRUMAN & SAKS (2010) PERFORMANCE MANAGEMENT AND EMPLOYEE ENGAGEMENT
Commitment strategy Engagement Performance Model (Gruman & Saks, 2010)
Gruman (2011) argues that one important way to enhance the Performance Management process is to focus
on fostering employee engagement as a driver of increased performance.
Engagement is often the key to an organisation’s success and competitiveness.
Three psychological conditions serve as antecedents for personal engagement:
1. Psychological meaningfulness One’s belief regarding how meaningful it is to bring oneself to a role
performance
2. Psychological safety One’s perception of how safe it is to bring oneself to a role
performance without fear of damage to self-image, status or career
3. Psychological availability One’s perception of how available one is to bring oneself into a
role
Performance agreement
Outlines what employees will be
expected to accomplish
(reviewing and goal setting)
Engagement facilitation
Focuses on job design and
facilitating the development of
engagement and psychological
capital
Performance and engagement appraisal and feedback
Focuses on
perceptions of justice & trust as drivers of engagement. Should
include an assessment of engagement behavior
, Then, performance agreement and engagement facilitation feed into employee engagement and subsequently
enhance job performance.
- The model is ongoing and continuous.
- Performance management processes should provide resources to employees that lead to the three
psychological conditions that are associated with higher levels of engagement.
Control strategy Management Control Systems (Merchant, 1982)
Management control is about taking steps to help ensure that the employees do what is best for the
organisation. A sound management control system stimulates action by spotting the significant variations from
the original plan and highlighting them for the people who can set things right.
- Control needs to focus on the results
CONTROL SYSTEMS
MERCHANT (1982) THE CONTROL FUNCTION OF MANAGEMENT
Basic control process
1. Establishing standards
2. Measuring performance against these standards
3. Correcting deviations from standards and plans
Why are controls needed?
Employees are sometimes unable or unwilling to act in the organisation’s best interest, and a set of controls
must be implemented to guard against undesirable behaviour and to encourage desirable actions
What is desired?
Three starting points:
1. Start form goals and objectives
2. Identify the key results (KR)
Lack of direction result control
3. Identify the key actions (KA)
Lack of direction action control
What is likely to happen?
Three issues:
1. Lack of direction
Do employees understand what they are expected to do (key actions) or to accomplish (key results)?
2. Lack of motivation
Are they properly motivated? Is there a congruence between the employees and organizational goals?
3. Personal limitations
Are they able to fulfil their desired roles?
What controls should be used?
If there is a discrepancy between what is desired and what is likely to happen, what controls should be used?
Consider:
- The total need for control
- The amount of control that can be designed
- The costs of the control and any unintended behavioral effect
By avoiding some behavioural problems and/or implementing one or more types of control to protect against
the remaining problems:
- Control-problem avoidance
- Action control (the actions taken)
- Results control (the results produced)
