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Definition of performance management

Performance management is a continuous process of identifying, measuring and developing the
performance of individuals and teams and aligning performance with the strategic goals of the
organisation.

Continuous Process
Performance management is on-going. It involves a never-ending process of setting goals and
objectives, observing performance, and giving and receiving on-going coaching and feedback.

Quote: “There are no systems or procedures in place.” This is one of the major faults in the
way that Phil and Claire are conducting the PM process, because, as from the definition of
Performance Management, it is a continuous process of identifying, measuring and developing
the performance of individuals and teams.

Alignment with Strategic Goals

Performance management requires that managers ensure that employees’ activities and
outputs are congruent with the organization’s goals and, consequently help the organisation
gain a competitive advantage. Performance management therefore creates a direct link
between employee performance and organizational goals and makes the employees’
contribution to the organisation explicit.

Quote: “They do not have job descriptions for their employees and even do not have a
set mission since they like to change each month.” This is one of the major faults in the way
that Phil and Claire are conducting the PM process, because, as from the definition of
Performance Management, performance management requires that managers ensure that
employees’ activities and outputs are congruent with the organization’s goals, therefore a
goal/mission is needed.

DISADVANTAGES/DANGERS OF POORLY IMPLEMENTED PM SYSTEMS

1. Increased turnover –if the process is not seen as fair, employees may become upset and
leave the organisation.

2. Use of misleading information- if a standardized system is not in place, there are multiple
opportunities for fabricating information about an employee’s performance.

3. Lowered self-esteem – self-esteem may be lowered if feedback is provided in an

inappropriate and inaccurate way.

4. Wasted time and money – performance management systems cost money and quite a bit
of time. These resources are wasted when systems are poorly designed and implemented.

5. Damaged relationships

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6. Decreased motivation to perform

7. Employee burnout and job dissatisfaction

8. Increased risk of mitigation – expensive lawsuits may be filed by individuals who feel they
have been appraised unfairly.

9. Unjustified demands on managers’ and employees’ resources- managers may simply

choose to avoid the system and employees may feel increased levels of overload.

10. Varying and unfair standards and ratings

11. Emerging biases- personal values, biases, and relationships are likely to replace
organisational standards

12. Unclear rating system- because of poor communication, employees may not know how
their ratings are generated and how the ratings are translated.

(Just FYI)

The performance management contribution

Advantages associated with the implementation of a performance management system:

1. Motivation to perform is increased – receiving feedback about one’s performance

increases the motivation for future performance. Knowledge about how one is doing and
recognition about one’s past successes provide the fuel for future accomplishments.

2. Self-esteem is increased – receiving feedback about one’s performance fulfils a basic

human need to be recognized and valued at work. This, in turn, is likely to increase
employees’ self-esteem.

3. Managers gain insight about subordinates – direct supervisors and other managers
in charge of the appraisal gain new insights into the person being appraised. Gaining
new insights into a person’s performance and personality will help the manager build a
better relationship with that person. Also, supervisors gain a better understanding of
each individual’s contribution to the organisation. This can be useful for direct
supervisors as well as for supervisors once removed.

4. The definitions of job and criteria are clarified – these employees gain better
understanding of the behaviours and results required of their specific position.
Employees also gain a better understanding of what it takes to be a successful
performer.

5. Self-insight and development are enhanced – participants in the system also gain a
better understanding of their particular strengths and weaknesses that can help them
better define future career paths.

6. Administrative actions are more fair and appropriate – a performance management

system helps ensure that rewards are distributed on a fair and credible basis. In turn,
such decisions based on a sound performance management system lead to improved
interpersonal relationships and enhanced supervisor-subordinate trust.

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7. Organizational goals are made clear – the employee understands the link between
what she does and organisational success. This is a contribution to the communication
of what the unit and the organization are all about and how organisational goals cascade
down to the unit and the individual employee. Performance management systems can
help improve employee acceptance of these wider goals.

8. Employee misconduct is minimized – having a good performance management in

place provides the appropriate context so that misconduct is clearly defined and labelled
as such and identified early on before it leads to sometimes irreversible negative
consequences.

9. Employees become more competent – there is a solid foundation for helping

employees become more successful by establishing developmental plans.

10. There is better protection from lawsuits – data collected through performance
management systems can help document compliance with regulations.

11. There is a better and timelier differentiation between good and poor performers –
performance management systems allow for a quicker identification of good and poor
performers. They also force supervisors to face up to and address performance
problems on a timely basis.

12. Supervisor’s views of performance are communicated more clearly - performance

management systems allow managers to communicate to their subordinates their
judgments regarding performance.

13. Organisational change is facilitated – performance management systems can be a

useful tool to drive organisational change. Once this new organisational direction is
established, performance management is used to align the organisational culture with
the goals and objectives of the organisation to make change possible. Employees are
provided training in the necessary skills and are rewarded for improved performance so
that they have both the knowledge and motivation to improve product quality and
customer service.

14. Motivation, commitment and intentions to stay in the organisation are enhances –
when employees are satisfied with their organisation’s performance management
system, they are more likely to be motivated to perform well, to be committed to their
organisation, and not try to leave the organisation.

15. Voice behaviour are encouraged – voice behaviour involves making suggestions for
changes and improvements that are innovative, challenge the status quo, are intended
to be constructive and are offered even when others disagree.

16. Employee engagement is enhanced – employees who are engaged feel involved,
committed, passionate, and empowered. Moreover, these attitudes and feelings result in
behaviours that are innovative and overall, demonstrate good organisational citizenship
and take action in support of the organisation.

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No it cannot because they do not have job descriptions for their employees and do not
have a set mission implemented as yet.

Prerequisites
There are 2 important prerequisites that are required before a performance management
system is implemented:

a. Knowledge of the organisation’s mission and strategic goals

Knowledge of the organisation’s mission and strategic goals is a result of strategic planning.
Strategic planning allows an organisation to clearly define its purpose or reason for existing,
where it wants to be in the future, the goals it wants to achieve, and the strategies it will use to
attain these goals. Once the goals for the entire organisations have been established, similar
goals cascade downward, with departments setting objectives to support the organisation’s
overall mission and objectives.

b. Knowledge of the job in question

This is done through job analysis. Job analysis is a process of determining the key components
of a particular job, including activities, tasks, products, services, and processes. Without a job
analysis, it is difficult to understand what constitutes the required duties for a particular job. The
tasks and KSAs needed for the various jobs are typically presented in the form of job
descriptions, which summarized the job duties, needed KSAs, and working conditions for a
particular job. This job description includes information about what tasks are performed. It also
includes information about the needed knowledge, skills and abilities.

1. PREREQUISITES (Just FYI)

There are 2 important prerequisites that are required before a performance management
system is implemented: Knowledge of the organisation’s mission and strategic goals,
Knowledge of the job in question

2. PERFORMANCE PLANNING
At the beginning of each performance cycle, the supervisor and the employee meet to
discuss and agree upon what needs to be done and how it should be done. This
performance planning discussion includes a consideration of results and behaviours as well
as a development plan.

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3. PERFORMANCE EXECUTION
This is what can be referred to as a “hands-on” stage. Employees will be engaged in the
actual work, striving to display the required behaviour towards the achievement of the
expected results. Note that in this stage, there is a two-way communication process
whereby the manager should provide feedback and coaching, while employees should
communicate openly about areas where they encounter problems that could impact
negatively on their performance.

4. PERFORMANCE ASSESSMENT
In the assessment phase, both the employee and the manager are responsible for
evaluating the extent to which the desired behaviours have been displayed, and whether the
desired results have been achieved. It is important that both employee and the manager
take ownership of the assessment process. The manager fills out her appraisal form and the
employee should also fill out this form. The inclusion of self-rating helps emphasize possible
discrepancies between self-views and the views that important others have of our
behaviour. Employee involvement in the process increases employee ownership and
commitment to the system; it provides important information to be discussed during the
performance review.

5. PERFORMANCE REVIEW
This stage is well known as the performance appraisal stage. It is hated by both managers
and employees. Managers are uncomfortable about this stage, especially when they have to
provide feedback on poor performance. Employees always regard this stage as one in
which the manager wants to get back at them. They always perceive this stage as
subjective and biased. However, if the PM of the organisation is done properly, that is, all
stages in this process are applied, there should not be any reason for the discomfort.

6. PERFORMANCE RENEWAL AND RECONTRACTING

This stage involves reviewing organisational goals in preparation for the next review cycle.
This stage acknowledges that in some instances goals are not reached, not because
employees do not make the effort, but because goals may not be practically achievable.

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Process of linking performance management to the strategic plan
 A conscious effort must be made to link the strategic plan with individual performance

 The organization strategic plan includes a mission statement and a vision statement as
well as goals and strategies that will allow for the fulfilment of the mission and vision.

 The higher the level of involvement the more likely it is that managers will see the
resulting strategies favourably

 It’s critical to ensure that each units mission and vision statements goals and strategies
are consistent with those of the organizational level

 Job descriptions must be revised to make sure they are consistent with the unit an
organization priorities

 The performance management system includes results, Behaviours, and developmental

plans consistent with the organizational and departmental level priorities

 Performance management systems have a critical role in translating strategy into action

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I would say that indeed, the process of linking performance management to the strategic plan
has been achieved as per the quote: “As the company grew, the owner ensured that each
person had a job description that was in line with the company’s mission. Each person
that he employed understood the strategic vision and goals of the company and became
an integral part of the company’s success.”

The process that should have been conducted is Environmental analysis. The following internal
issues should be considered in any environmental analysis:
 Organizational structure – conducive to fast and effective communication
 Organizational culture – norms and values
 Politics – competition for internal resources
 Processes
 Size

By focusing on the size of the organization, it would have been able to detect if they had a staff
shortage.

Opportunity + weakness = constraint

In a constraint situation, the external opportunity is present; however the internal situation is not
conductive to taking advantage of the external opportunity. The external opportunity would be
there but absent the internal capabilities, it would not turn into an advantageous business
scenario.

The opportunity is the contract that the municipality offers to Roses Inc. but the weakness is
their staff shortage.

(Just FYI)

1) Opportunity + strength= leverage

The best combination of external and internal factors occurs when there is an opportunity in the
environment and a matching strength within the organisation to take advantage of that
opportunity. These are obvious directions that the organisation should pursue.

2) Opportunity + weakness= constraint

In a constraint situation, the external opportunity is present; however the internal situation is not
conductive to taking advantage of the external opportunity. The external opportunity would be
there but absent the internal capabilities, it would not turn into an advantageous business
scenario.

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3) Threat + strength= vulnerability
There is an external threat, but this threat can be contained because of the presence of internal
strengths.

4) Threat + weakness= problem

In the worst scenario, there is an external threat and an accompanying internal weakness.

Results approach

 Emphasizes the outcomes and results produced by the employees.

 Does not consider the traits that the employees may possess or how employees do the
job.

 It’s basically a bottom line approach that is not concerned about the employees’
behaviours and processes but focuses on what is produced.

 Defining and measuring results usually takes less time than defining and measuring
Behaviours needed to achieve these results.

 The results approach is usually seen as more cost effective because results can be less
expensive to track than Behaviours.

The results approach is most appropriate in the following circumstances:

 Workers are skilled in the needed behaviours – workers know what specific behaviours
are needed to achieve the desired results and are sufficiently skilled to know what to do
to correct any process related problems

 Behaviours and results are obviously related - certain results can be obtained only if the
worker engages in certain specific behaviours. This is the case of jobs involving
repetitive tasks i.e. assembly lines, paper delivery.

 Results show consistent improvement over time – when results improve consistently it’s
an indication that workers are aware of the Behaviours needed to complete the job
successfully. It appropriate to adopt a results approach to assessing performance.

 The are many ways to do the job right -When there are different ways in which one can
do the tasks required for a job, the results approach is appropriate. An emphasis on
results can be beneficial because it could encourage employees to achieve the desired
outcomes in creative and innovative ways. The reason for using this approach is that
due to the nature of their jobs, there are many ways to do the job right to achieve good
results. Therefore the emphasis should be placed on the outcome instead of the
process. By using the results approach the performance of the landscapers can be
measured by the outcome of the final impression and design.

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Quote: “Landscaping is an intricate field which could be done in a number of ways, but
the most important factor is the final impression and design.”
(Just FYI)

Approaches to measuring performance: Behavior approach

 Emphasizes what an employees does on the job and does not consider employees traits or
the outcomes resulting from their behaviours. It’s basically a process oriented approach that
emphasizes how an employee does the job.

It’s most appropriate under the following circumstances:

 The link between behaviours and results is not obvious – e.g. the salesperson may not be
able to close the deal because of a downturn in the economy

 Outcomes occur in the distant future – the desired results will not be seen for a long time

 Poor results are due to causes beyond the performers control

Approach to measure Performance: Trait approach

 Emphasizes the individual performer and ignores the specific situation, behaviours and
results.

 If the trait approach is adopted, raters adopt relatively stable traits. These can include
abilities, such as cognitive abilities or personality

 This approach is justified based on the positive relationship found between abilities and
personality traits and desirable work related behaviors.

 Some of the challenges of implementing a system that emphasizes the measurement of

traits only include:

 Traits are not under the control of individuals – they are fairly stable over one’s life span

 Because an individual possesses a certain trait that does not mean that it will lead to
desired results and behaviors.

There are situations in which a trait oriented approach can be fruitful:

 As part of its business strategy, an organization may anticipate drastic structural
changes that will lead to a reorganization of most functions and the resulting reallocation
of employees.

 In most organisations, performance is not measured using the trait approach

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A combination of three factors allows some people to perform at higher levels than others:

 Declarative knowledge – information about facts and things regarding a given tasks
requirements, labels, principles and goals

Quote: “Each person that he employed understood the strategic vision and goals of
the company and became an integral part of the company’s success.”

 Procedural knowledge – the combination of knowing what to do and how to do it and

includes cognitive, physical, perceptual, motor and interpersonal skills

Quote: “Each employee is qualified, trained and has the necessary skills to work at
Roses Inc.”

 Motivation – involves three types of choice behaviors

 Choice to expend effort
 Choice to the level of level of effort
 Choice to persist in the expenditure of that level of effort

Quote: “Employees feel committed and driven to perform well at the company.”

Based on the above factors and quotes I would say that the employees does indeed have
all three of the determinants of performance.

The three determinants have a multiplicative relationship:

Performance = declarative knowledge x procedural knowledge x motivation

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Differentiating – Distinguish between superior and average performance
Threshold – Needed to perform to minimum standard

To determine whether the required competencies for a specific position are present, indicators
are used. Two main systems that can be used to measure behaviour are comparative and
absolute systems, each having its own advantages and disadvantages.

Comparative system – Compares employees with each other

Absolute system – Compares employees with pre-specified performance standard

They are using the comparative system as per the quote: “However, from his research he
does learn that employees are evaluated against each other’s performance.”

Advantages of Comparative Systems

1. Easy to explain
2. Straightforward
3. Better control for biases and errors found in absolute systems
 Leniency  Severity  Central tendency

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(Just FYI)
Disadvantages of Comparative Systems
1. Rankings may not be specific enough for
 Useful feedback
 Protection from legal challenge
2. No information on relative distance between employees
3. Specific issues with forced distribution method

(Just FYI)
TYPES OF ABSOLUTE SYSTEMS
 ESSAYS
 BEHAVIOR CHECKLISTS
 CRITICAL INCIDENTS
 GRAPHIC RATING SCALES

Essays

Advantage:
1. Potential to provide detailed feedback

Disadvantages:
1. Unstructured and may lack detail
2. Depends on supervisor writing skill
3. Lack of quantitative information; difficult to use in personnel decisions

Behaviour checklists

Advantage:
1. Easy to use and understand

Disadvantage:
1. Scale points used are often arbitrary
2. Difficult to get detailed and useful feedback

Critical incidents

Kinds of measurement
1. Report of specific employee behaviour
 Allows focus on specific behaviour
 Very time-consuming

2. Examples of behaviour illustrative of core competencies

 Easier to use
 Describes behaviour desired

Graphic rating scales:

BARS improvement
 Behaviorally Anchored Rating Scales (BARS)
 Use critical incidents as anchors
 Involves multiple groups of employees in development
 Identify important job elements
 Describe critical incidents at various levels of performance
 Check for inter-rater reliability

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The judgmental procedure consists of considering every aspect of performance and then
arriving at a defensible summary. This basically holistic procedure relies on the ability of the
rater to arrive at a fair and accurate overall score.

Mechanical Procedure: The use of weights allows the supervisor to come to an objective and
clear overall performance score for each employee. As this example illustrates, the use of
clearly specified weights allows the supervisor to come to a verifiable score for each employee.
Thus, the supervisor and the employees can be sure that the overall performance rating is
reflective of the employee's performance in each category.

In most cases, the mechanical method is superior to the judgmental method. A supervisor is
more likely to introduce his or her own biases in computing the overall performance score when
no clear rules exist regarding the relative importance of the various performance dimensions
and there is no direction on how to combine the various performance dimensions in calculating
the overall score.

No it is not. Conducting only an annual review might not provide sufficient opportunity for the
supervisor and subordinate to discuss performance issues in a formal setting.

THE RECOMMENDATION THEN IS TO CONDUCT SEMIANNUAL OR QUARTERLY

REVIEWS.

This type of system allows individuals to receive feedback and adjust goals or objectives if
necessary in preparation for the more in-depth annual review.

When is the best time to complete the reviews?

Most organizations adopt one of two possibilities. First, the appraisal form could be completed
on or around the annual anniversary date. In the case of semiannual reviews, the first review
would be six months before the annual anniversary date and the second review would be on or
around the anniversary date. The biggest advantage of this choice is that the supervisor does
not have to fill out everyone's forms at one time. The disadvantage of this choice is that,
because results are not tied to a common cycle for all employees, resulting rewards cannot be
tied to the fiscal year.

The second choice is to complete the appraisal forms toward the end of the fiscal year.

Adopting this approach leads to the completion of the appraisal form for all employees at about
the same time, thereby facilitating cross-employee comparisons as well as the distribution of
rewards.

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This helps employees synchronize their work and objectives with those of their unit and
organization

Completing appraisal forms should not uncover any surprises and filling it out should not create
any time burden for the supervisors.

(Just FYI)

PERFORMANCE MANAGEMENT SYSTEMS CAN INCLUDE SIX FORMAL MEETINGS

BETWEEN THE SUBORDINATE AND THE SUPERVISOR:
 System inauguration
 Self-appraisal
 Classical performance review
 Merit/ salary review
 Development plan
 Objective setting

The first meeting, system inauguration, includes a discussion of how the system works and the
identification of the requirements and responsibilities resting primarily on the employee and on
the supervisor. This discussion includes the role of self* appraisal and the dates when the
employee and supervisor will meet formally to discuss performance issues. This meeting is
particularly important for new employees,

The second meeting, the self-appraisal, involves the employee's assessment of herself. This
meeting is informational in nature and, at this point, the supervisor does not pass judgment on
how the employee regards her own performance. This meeting provides an opportunity for the
employee to describe how she sees her own performance during the review period.

The third meeting, the classical performance review meeting, during which employee
performance is discussed, includes both the perspective of the supervisor and that of the
employee. Most performance management systems include this type of meeting only.

The fourth meeting, the merit/salary review, discusses what, if any, compensation changes will
result from the period's performance. It is useful to separate the discussion of rewards from the
discussion of performance so that the employee can focus on performance first and then on
rewards. If these meetings are not separated, employees may not be very attentive during the
discussion of performance and are likely to feel it is merely the price they must pay to move on
to the part of the meeting that really matters: the discussion about rewards.

Supervisors should explain clearly the link between the employee's performance, discussed in
detail in a previous meeting, and the rewards given.
The fifth meeting, the development plan discusses the employee’s developmental needs and
what steps will be taken to improve it in the following period.

The sixth and final meeting, objective setting, includes setting goals, both behavioral and
result oriented, regarding the following review period. At this point, the employee has received
very clear feedback about her performance during the past review period, knows what rewards
will be allocated (if any), understands developmental needs and goals, and knows about
resources available to help in the process of acquiring any required skills.

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Although these six meetings are possible, not all six take place separately. For example, the
self-appraisal, classical performance review, merit/salary review, developmental plan, and
objective setting meetings may all take place during one umbrella meeting

 The plan is to implement a Performance Management System.

 To ensure that a good communication plan is in place so that employees are always
informed about the PM system.
 If employees have more knowledge about the Performance Management system, it leads to
greater satisfaction and acceptance of the system. Communication plans are introduced to
ensure that information regarding the Performance Management system is disseminated
throughout the organisation.

Good communication plans convey the following information:

 They provide general information about performance management, goals of performance
management and the way in which systems are implemented.

 They provide information on how the Performance Management system will help accomplish
strategic goals – the relationship between performance management and the strategic plan.

 They provide a description of the benefits of the Performance Management system.

 They give a detailed description of the performance management process as well as the
timeline.

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 They provide information on the role and responsibilities of each person involved at each
stage of the process.

 They provide information on the relationship between performance management and other
initiatives and systems such as training, promotion and succession planning.

It is known as a contingent pay plan.

In traditional reward systems, the type of position and seniority are the determinants of salary
and salary increases, not performance. There is no relationship between performance
management and rewards, whereas with Contingent pay (CP) also known as “pay for
performance” individuals are awarded based on how well they perform on the job Employees
receive increases in pay based wholly or partly on job performance.

Quote: “…the rewards for performance were so small that it would make no difference if
he were to perform at the absolute minimum of what is expected or if he were to go
above and beyond his call of duty.”

Problems associated with contingent pay plans

 A poor performance management system is in place – Employees may challenge
the CP plan legally

 The folly of rewarding A while hoping for B – Rewarding results and behavior Not
part of organizational goals

 Rewards are not considered significant – rewards must be meaningful for all
employees

 Managers are not accountable

 There exists extrinsic motivation at the expense of intrinsic motivation – exclusive

emphasis on rewards

 Rewards for executives are disproportionately large compared to rewards for

everyone else

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Before the PMS is implemented formally, it is a good idea to test a version of the entire system
so that adjustments and revisions can be made as needed. In the pilot test of the system,
evaluations are not recorded in employee files; however, the system is implemented in its
entirety from beginning to end, including all the steps that would be included if the system had
actually been implemented.

Procedure
Meetings take place between supervisor and employee, performance data are gathered,
developmental plans are designed, and feedback is provided. The most important aspect of the
pilot test is that all participants maintain records noting any difficulties they encounter, ranging
from problems with the appraisal form and how to performance is measured to the feedback
received. The pilot test allows for the identification and early correction of any flaws before the
system is implemented throughout the organisation.

Purpose
The pilot test allows us to gain information from the perspective of the system’s users on how
well the system works, to learn about any difficulties and unforeseen obstacles, to collect
recommendations on how to improve all aspects of the system, and to understand personal
reactions to it. A final reason for conducting a pilot test is that end users are likely to have a
higher system acceptance rate knowing that stakeholders in the company had a say in its
design, rather than feeling that the system was created by the HR department alone.

An important decision to be made is the selection of the group of employees with whom the
system will be tested. In selecting a group, we must also consider that he group should be
sufficiently large and representative of the entire organisation so that reactions from the group
will be generalized to the rest of the organisation. The group should not be regarded as
particularly productive, loose, hardworking, and lazy and so forth.

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A 360-degree feedback system is a process in which employees receive confidential,
anonymous feedback from the people who work with them. For developmental purposes, these
people are typically subordinates, the direct manager, peers and customers. The system will
include questions covering a broad range of workplace competencies, measured on a rating
scale, and will also request a rater to provide written comments. The system includes the
employee being rated.

This is a tool that helps employees to build new skills and improve their performance in general
by gathering and analysing performance information from several reliable sources. The
information from various sources will be compared to establish discrepancies between all the
opinions on an employee’s performance. This system is largely implemented for the employees
who have a supervisory role, but it can be used for all positions in the organisation. The internet
is becoming the best tool of administering a 360-degree feedback system.
The 360-degree feedback system automatically compiles the results into a table and presents
them in a format that helps the recipient to create a personal developmental plan. Individual
responses are combined with responses from other raters in the same category to preserve
anonymity and to give employees a clear picture of their overall strengths and weaknesses. The
results can be automatically emailed to employees and the direct line manager to be reviewed
before they meet to establish a PDP.

1. Decreased possibility of biases- because these systems include information from more
than one source, there is decreased possibility of biases in the identification of employees’
weaknesses.

2. Increased awareness of expectations- employees become very aware of others’

expectations about their performance.

3. Increased commitment to improve- employees become aware of what others think about
their performance, which increases their commitment to improve because information about
performance is no longer a private matter.

4. Improved self-perceptions of performance- employees’ distorted views of their own

performance are likely to change as a result of the feedback received from other sources.

5. Improved performance- having information on one’s performance, if paired with a good

developmental plan, is likely to lead to performance improvement.

6. Reduced “undiscussables”- many supervisors may feel uncomfortable about providing

negative feedback, but a 360-degree system makes providing such feedback easier.

7. Employees enabled to take control of their careers- by receiving detailed and

constructive feedback on weaknesses and strengths in various areas, employees can gain a
realistic assessment of where they should go with their careers.

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 1. Negative feedback can hurt an employee’s feelings;

2. The system is likely to lead to positive results only if individuals feel comfortable with the
system and believe they will be rated honestly and treated fairly;

3. When very few raters are providing the information, it may be easy for the employee
being rated to identify who raters are. When anonymity is compromised, raters are more
likely to distort the information they provide;

4. Raters may become overloaded with forms to fill out because they need to provide
information on so many individuals.

5. Implementing a 360-degree feedback system should not be a one-time only event. The
system should be in place and data collected over time on an on-going basis. The
implementation of on-going 360-degree feedback systems is sometimes labelled a 720-
degree feedback system, referring to the fact that the collection of 360-degree data
takes place at least twice.

When systems have the following characteristics they are most likely to be successful:

1. Anonymity

2. Feedback interpretation- good systems allow the person being rated to discuss the
feedback received with a person interested in the employee’s development

3. Follow-up- once feedback is received, it is essential that a developmental plan is created

right away

4. Used for developmental purposes only

5. Avoidance of survey fatigue- survey fatigue can be avoided if individuals are not asked
to rate too many employees at the same time

6. Emphasis on behaviours

7. Raters go beyond ratings

8. Raters are trained

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Already Covered (1.2 of May/June 2016)

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The following are the Major Components of Appraisal Forms:

1. Basic employee information – includes basic employee information such as job title,
division, department and other work group information, employee number, and pay grade or
salary classification.

a. Usually include the dates of the evaluation period, the number of months and years
the rater has supervised or worked with the employee, an employee's starting date
with the company and starting date in the current job, the reason for the appraisal,
current salary and position in range, and the date of the next scheduled evaluation.

2. Accountabilities, objectives, and standards – this section of the form would include the
name and description of each accountability, objectives agreed upon by manager and
employee, and the extent to which the objectives have been achieved. The objectives are
weighted in terms of importance, which facilitates the calculation of an overall performance
score.

3. Competencies and indicators – This section of the form includes a definition of the various
competencies to be assessed, together with their behavioral indicators.

4. Major achievements and contributions – Forms include a section in which a rater is

asked to list the two or three major accomplishments of the individual being rated during the
review period.

5. Developmental achievements – Section of the form includes information about the extent
to which the developmental goals set for the review period have been achieved.

6. Developmental needs, plans, and goals – This section of the form is future oriented and
includes information about specific goals and timetables in terms of employee development.

7. Stakeholder input – Some forms include sections to be filled out by other stakeholders,
such as customers with whom the employee interacts. Overall, stakeholders are defined as
people who have firsthand knowledge of and are affected by the employee's performance.
Input from other stakeholders is collected from them by using forms separate from the main
appraisal

8. Employee comments – - Section includes reactions and comments provided by the

employee being rated. In addition to allowing formal employee input, which improves the
perceived fairness of the system, the inclusion of this section helps with legal issues
because it documents that the employee has had an opportunity to participate in the
evaluation process.

9. Signatures - The final section of most forms includes a section in which the employee being
rated, the rater, and the rater's supervisor provide their signatures.

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No, it is not appropriate.

 Quote: “The form does not include any other information.” This statement indicates that
company is lacking the major component of “Basic employee information” of Appraisal Forms.

 Quote: “…the appraisal forms are signed only by the line manager….” This statement indicates
that company is lacking the major component of “Signatures”.

 Quote: “Individual employees do not have a say in their performance rating and are only
informed of it when they receive a letter from HR in January…” This statement indicates that
company is lacking the major component of “Employee Comments”.

Supervisors
An advantage of using supervisors as a source of performance information is that they are
usually in the best position to evaluate performance in relation to strategic organizational goals.
Also, supervisors are often those making decisions about rewards associated with performance
evaluation. In addition, supervisors are able to differentiate among various performance
dimensions

Peers
Many organizations use performance evaluations provided by peers. Change management is
extremely important to the successful implementation of this consolidation Successful
teamwork is crucial to change management initiatives.

Subordinates
Subordinates are a good source of information regarding the performance of their managers.
Subordinates are in a good position to evaluate leadership competencies, including delegation,
organization, and communication. Overall, performance information provided by subordinates is
more accurate when the resulting ratings are to be used for developmental purposes rather than
administrative purposes.

Self
When employees are given the opportunity to participate in the performance management
process, their acceptance of the resulting decision is likely to increase, and their defensiveness
during the appraisal interview is likely to decrease.

Customers
Collecting information from customers can be a costly and time-consuming process; however,
performance information provided by customers is particularly useful for jobs that require a high
degree of interaction with the public or with particular job-related individuals.

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Results approach.
Quote: “The best sales person is determined by calculating the highest number of
properties sold each year.” This statement indicates that the agency focuses more on the final
results obtained rather than their behaviours and their methods used to obtain them.
Refer to the answer from 2.4 of May/June 2016

Refer to the answer from 2.5 of May/June 2016

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Developmental plan objectives
The overall objective of a developmental plan is to encourage continuous learning, performance
improvement, and personal growth. Developmental plans have other more specific objectives:

1. Improve performance in current job- a good developmental plan helps employees meet
performance standards.

2. Sustain performance in current job- provide tools so that employees can continue to meet
and exceed expectations regarding the current job

3. Prepare employees for advancement- includes advice and courses of action that should
be taken so that employees will be able to take advantage of future opportunities and career
advancement. Specifically, a good plan indicates which new competencies and behaviours
should be learned to help with career advancement.

4. Enrich the employee’s work experience- a good plan provides employees with growth
opportunities and opportunities to learn new skills. These opportunities provide employees
with intrinsic rewards and a more challenging work experience, even if the new skills learned
are not a formal part of their jobs. The new skills can be useful in case of lateral transfers
within the organisation.

He is in the PERFORMANCE EXECUTION stage.

Quote: “They drew Oliver’s developmental plan together…” This statement indicates that
the Performance Planning Stage, which is one before the Performance Execution Stage, has
been fulfilled.

Quote: “…he felt motivated and ready to begin working.” This statement indicates his
engagement in the actual work, striving to display the required behaviour towards the
achievement of the expected results.

PERFORMANCE EXECUTION
This is what can be referred to as a “hands-on” stage. Employees will be engaged in the actual
work, striving to display the required behaviour towards the achievement of the expected
results. Note that in this stage, there is a two-way communication process whereby the manager
should provide feedback and coaching, while employees should communicate openly about
areas where they encounter problems that could impact negatively on their performance.

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Once the review cycle begins, the employee strives to produce the results and display the
behaviours agreed upon earlier as well as work on developmental needs.

At execution stage the following factors must be present:

1. Commitment to goal achievement

2. Ongoing performance feedback and coaching- the employee needs to take a

proactive role in soliciting performance feedback and coaching from her supervisor.

3. Communication with supervisor- the burden is on the employee to communicate

openly and regularly with the supervisor

4. Collecting and sharing performance data- the employee should provide the
supervisor with regular updates on progress toward goal achievement, in both behaviour
and results.

5. Preparing for performance reviews- the employee should engage in an ongoing and
realistic self-appraisal so that immediate corrective action can be taken if necessary.

(Just FYI)

SUPERVISORS have primary responsibility over the following issues:

1. Observation and documentation- supervisors must observe and document

performance on a daily basis. It is important to keep track of examples of both good and
poor performance.

2. Updates- as the organisation’s goals may change, it is important to update and revise
initial objectives, standards, and key accountabilities and competency areas

3. Feedback- feedback on progression towards goals and coaching to improve

performance should be provided on a regular basis certainly before the review cycle is
over.

4. Resources- Supervisors should provide employees with the resources and

opportunities to participate in developmental activities

5. Reinforcement- supervisors must let employees know that their outstanding

performance is noticed by reinforcing effective behaviours and progress toward goals.
Feedback should also be given regarding negative performance and how to remedy the
observed problem.

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There are several steps that must be considered in the creation of a successful strategic plan:
1. Conduct environmental analysis

The four other steps are:

2. Create an organizational mission
3. Create an organizational vision
4. Set goals
5. Create strategies that will allow the organization to achieve its mission, vision and goals

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Stage 3: Create an organizational vision
 A statement of an organizations future aspirations.
 The vision statement includes descriptions of what the organization would like to
become in the future.
 The statement mentioned above indicates it’s future aspiration and includes
descriptions of what the organization would like to become in the future.

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Thabiso has experienced the NEGATIVITY ERROR
The supervisor has given him a low performance rating based on rumors that he heard about
Thabiso and did not give him a chance to defend himself.

Corrective action:
How can just one negative incident be used to pin an employee down? The rater did not even
consider the fact that Thabiso is a dedicated and loyal employee who has never missed a
deadline and is one of the fastest and most efficient couriers at the company.

The process to follow is to implement a Rater error training (RET)

The goal of RET is to make raters aware of what rating errors they are likely to make and to
help them develop strategies to minimise those errors. The goal of RET is to increase rating
accuracy by making raters aware of the unintentional errors they are likely to make. RET
programs typically include definitions of the most typical errors and a description of possible
causes for those errors. Such programs also allow trainees to view examples of common errors
and to review suggestions on how to avoid making errors. This can be done by showing video
tapes designed to elicit rating errors and asking trainees to fill out appraisal forms regarding the
situations that they observed. Finally, a comparison is made between the ratings provided by
the trainees and the correct ratings. The trainer then explains why the errors took place, which
specific errors were made, and ways to overcome the errors in the future.

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Quote: “The first that Sumaya explained to her team is that their remuneration is directly
linked to their performance.” This statement indicates that they are using a Contingent pay
(CP) Plan also known as “pay for performance” individuals are awarded based on how well
they perform on the job Employees receive increases in pay based wholly or partly on job
performance.

Refer to the answer from 4.2 of May/June 2016

Examples of systems that work well in organisations with TRADITIONAL CULTURES are the
following:

 Piece rate – employees are paid based on the number of units produced or repaired. This
system is usually implemented in manufacturing environments. In service organisations, this
could involve the number of calls made or the number of calls made or the number of
clients, or potential clients, contacted. This system is usually implemented in call centres.

 Sales commissions – employees are paid based on a percentage of sales. This system is
usually implemented in car dealerships

 Group incentives – employees are paid based on extra group production based on result-
oriented measures. This system is implemented frequently in the retail industry.

(Just FYI)

Examples of systems that work well in organisations with INVOLVEMENT CULTURES are the
following:

 Profit sharing – employees are paid based on the performance of a group and on whether
the group has exceeded a specific financial goal. This type of system is implemented in
many large law firms

 Skill-based pay – employees are paid based on whether they acquire new knowledge and
skills that are beneficial to the organisation. This type of system is usually implemented in
knowledge-based organisations such as software development companies.

 Piece rate – employees are paid based on the number of units produced or repaired
 Sales commissions – payment based on a % of sales
 Group incentives – payment based on extra group production based on results oriented
measures

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Quote: “Sumaya will not be the only one to provide performance ratings. Instead
performance information is collected from sources all around the trainee.” This statement
indicates that they are using the 360 degree feedback system.
Refer to the answer from 5 of May/June 2016 for more information

Refer to the answer from 5 of May/June 2016

 Rater error training

This training alerts supervisors to the fact that there are errors associated with the performance
management system, which are either intentional or unintentional. In order to increase rating
accuracy, rater error training provide guidance on how to avoid these errors.

 Frame of reference training

During this training, supervisors are familiarised with the various performance dimensions to be
assessed. The overall goal of this training is to give raters the skills to provide accurate ratings
on each performance dimension by developing a common frame of reference. The point of
departure in this training is the discussion of the job description of the employee to be rated.

 Behavioural observation training

This training focuses on enhancing raters’ ability to observe, store and recall information about
performance.

 Self-leadership training
The goal of this training is to improve raters’ confidence in their ability to manage performance.
The assumption is that if there is increased self-direction, self-motivation and self-confidence,
there will be increased accuracy.

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Refer to the answer from 2.4 of May/June 2016

Critical-Incident Method Behaviorally Anchored Rating Scale

(BARS)
Based on managers’ records of specific Rates behavior in terms of a scale showing
examples of employees acting in ways that specific statements of behavior that describe
are either effective or ineffective. different levels of performance.
Employees receive feedback about what they
do well and what they do poorly and how they
are helping the organization achieve its
goals.

Already Covered (1.2 of May/June 2016)

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Page 33 of 42
Aims and role of PM systems
The information collected by a PMS is most frequently used for salary administration,
performance feedback, and the identification of employee strengths and weaknesses.
Performance management systems can serve the following 6 purposes.

1. Strategic purpose
To help top management achieve strategic business objectives. By linking the organisation’s
goals with the individual goals, the PMS reinforces behaviours consistent with the attainment of
organisational goals.

A second strategic purpose of PMS is that they play an important role in the on boarding
process. On boarding refers to the process that leads new employees to transition from being
organisational outsiders to organisational insiders. It allows new employees to understand the
types of behaviours and results that are valued and rewarded, which, in turn, lead to an
understanding of the organisation’s culture and its values.

2. Administrative purpose
Such administrative decisions include salary adjustments, promotions, employee retention or
termination, recognition of superior individual performance, identification of poor performers,
layoffs, and merit increases. Therefore, the implementation of reward systems based on
information provided by the PMS falls within the administrative purpose.

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3. Informational purpose
PMS serve as an important communication device.

1. They inform employees about how they are doing and provide them with information on
specific areas that may need improvement.

2. Related to the strategic purpose, they provide information regarding the organisation’s and
the supervisor’s expectations and what aspects of work the supervisor believes are most
important.

4. Developmental purpose
Feedback is an important component of a well-implemented performance management system.
Managers can use feedback to coach employees and improve performance on an on-going
basis. This feedback allows for the identification of strengths and weaknesses as well as the
causes for performance deficiencies. Feedback is useful only when employees are willing to
receive it. Organisations should strive to create a “feedback” culture that reflects support for
feedback, including feedback that is nonthreatening and is focuses on behaviours and coaching
to help interpret the feedback provided. Another aspect of the developmental purpose is that
employees receive information about themselves that can help them individualize their career
paths.

5. Organisational maintenance purpose

Provide information to be used in workforce planning. Workforce planning comprises a set of
systems that allows organisations to anticipate and respond to needs emerging within and
outside the organisation, to determine priorities, and to allocate human resources where they
can do the most good. An important component of any workforce planning effort is the talent
inventory, which is information on current resources. Other organisational maintenance
purposes include assessing future training needs, evaluating performance achievements ant the
organisational level, and evaluating the effectiveness of HR interventions.

6. Documentation purpose

Performance management systems allow organisations to collect useful information that can be
used for several documentation purposes.

1. Performance data can be used to validate newly proposed selection instruments.

2. Performance management systems allow for the documentation of important administrative

decisions. This information can be especially useful in the case of litigation.

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Page 36 of 42
Opportunity + Strength= Leverage

The best combination of external and internal factors occurs when there is an opportunity in the
environment and a matching strength within the organisation to take advantage of that
opportunity. These are obvious directions that the organisation should pursue.

Quote: “Since then the company is doing well…” this statement indicates its strength.

Quote: “but they are struggling to cope with all the new business.” this statement indicates
its weakness.

The answer is therefore leverage.

Already Covered (2.3 of May/June 2016)

Environmental analysis
An environmental analysis identifies external and internal parameters with the purpose of
understanding broad issues related to the industry where the organisation operates so that
decisions can be made against the backdrop of a broader context. An examination of the
external environment includes a consideration of opportunities and threats.

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Good vision statements have the following characteristics:
 Brief – a vision statement should be brief so that employees can remember it

 Verifiable – a good vision statement should be able to stand the reality test

 Bound by a timeline – a good vision statement specifies a timeline for the fulfilment of
various aspirations

 Current – outdates vision statements are not useful. Vision statements should be updated
on a regular basis, ideally as soon as the old vision is fulfilled.

 Focused – a good vision statement is not a laundry list of aspirations, but rather focuses on
just a few aspects of an organisation’s performance that are important to future success

 Understandable – vision statements need to be written in a clear and straightforward

manner so that they are understood by all employees

 Inspiring – good vision statements make employees feel good about their organisation’s
direction and motivate them to help achieve the vision.

 A Stretch

Already Covered (2.4) of May/June 2016)

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Competencies – Measurable clusters of Knowledge, Skills and Abilities (KSAs) that are critical
in determining how results will be achieved. Critical in determining how results will be achieved

Example: These competencies can be divided into differentiation and threshold competencies.

Already Covered (3.1) of May/June 2016)

Already Covered (3.5) of May/June 2016)

Several additional measures can be used on a regular basis to monitor and evaluate the
system:
 A confidential survey could be administered to all employees asking about perceptions
and attitudes regarding the system.

 Interviews can be conducted with key stakeholders including managers and employees
who have been involved in developing and implementing the Performance Management
System.

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 1. Number of individuals evaluated- one of the most basic measures is to assess the
number of employees who are actually participating in the system

2. Distribution of performance ratings- an indicator of quality of the performance

assessment is whether all or most scores are too high, too low, or clumped around the
centre of the distribution
3. Quality of information- another indicator of quality of the performance assessment is
the quality of the information provided in the open-ended sections of the forms

4. Quality of follow up actions- a good indicator of the quality of the system is whether it
leads to important follow-up actions in term of developmental activities or improved
processes.

5. Quality of performance discussion meeting- a confidential survey can be distributed

to all employees on a regular basis to gather information about how the supervisors is
managing the performance discussion meeting

6. System satisfaction- a confidential survey could also be distributed to assess the

perceptions of the system’s users, both raters and rates. This survey can include
questions about satisfaction with equity, usefulness, and accuracy.

7. Overall cost/benefit ratio or return on investment (ROI)- a fairly simple way to

address the overall impact of the system is to ask participants to rate the overall
cost/benefit ratio for the PMS

8. Unit level and organisational level performance- another indicator that the system is
working well is provided by the measurement of unit- and organisational-level
performance. Such performance indicators might be customer satisfaction with specific
units and indicators of the financial performance of the various units or the organisation
as a whole.

Already Covered (2.3) of Oct/Nov 2015)

Already Covered question 5 of May/June 2016)

Page 40 of 42
Coaching is a collaborative, ongoing process in which a manager interacts with employees,
playing an active role and taking an interest in their performance. In general, coaching involves
directing, motivating and rewarding employee behaviour. Coaching is a day-to-day function that
involves observing performance, complimenting good work and helping to correct and improve
any performance that does not meet expectations and standards. Coaching is also concerned
with long-term performance and involves ensuring that the developmental plan is being
achieved. Being a coach, therefore, is similar to serving as a consultant and for coaching to be
successful, a coach must establish a helping relationship. Establishing this helping relationship
is particularly important when the supervisor and subordinate do not have similar cultural
backgrounds, as is often the case with expatriates or when implementing a global performance
management system. In such situations, helping and trusting relationships allow for what is
labelled cultural transvergence in performance management, which means that cultural
differences are discussed openly and alternative practices which enhance individual and team
performance are implemented.
Thus, coaching helps to turn feedback into results. However, for this to happen, coaches need
to do the following:

 Establish developmental objectives

The manager works together with the employees in creating the developmental plan and its
objectives.

 Communicate effectively
The manager maintains regular and clear communication with employees about their
performance.

 Motivate employees
Managers must reward positive performance. When positive performance is rewarded,
employees are motivated to repeat this level of positive performance in the future.

 Document performance
Managers observe employee behaviour and results. Evidence of instances of good and poor
performance must be gathered.

 Give feedback
Managers measure employees’ performance and their progress towards achieving goals. They
praise good performance and point out instances of substandard performance. Managers
provide feedback to enable employees to improve their performance in the future.

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 Diagnose performance problems
Managers must listen to employees and gather information to determine whether performance
reaches the set standard. Managers should point out instances of substandard performance
and assist employees to avoid poor performance in the future.
 Develop employees
Managers provide financial support and resources for employees’ development (eg funding for
training and allowing time away from the job for developmental activities) by helping employees
to plan for the future and by giving challenging assignments that force employees to learn new
skills.(Note that not all coaches perform coaching functions by engaging in all of the behaviour
described above. However, managers who do so are highly effective leaders!)

CP plans can help improve the motivation of employees when each of the following conditions is
present:
1. Employees see a clear link between their efforts and the resulting performance (expectancy)
2. Employees see a clear link between their performance level and the rewards received
(instrumentally)
3. Employees value the rewards available (valance)
Motivation = Expectancy x Instrumentality x Valence

Traditional cultures are characterized by top-down decision making, vertical communication,

and clearly defined jobs.
(Just FY)
Involvement culture is different from traditional culture. Organisations with involvement
cultures are characterised by shared decision making, lateral communications, and loosely
defined roles.

Quote: “…this team of engineers must work together to increase the sales volume of
their project.” This statement indicates that Sales commissions is the ideal type of CP system
that should be used for this team of engineers.
Sales commissions – employees are paid based on a percentage of sales. This system is
usually implemented in car dealerships
Already Covered (4.2) of Oct/Nov 2015)
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