2

CHAPTER
 PART ONE
FUNDAMENTALS OF
PERFORMANCE MANAGEMENT

Chapter 1: Introduction to Performance Management

Chapter 2: Defining and Measuring Performance
Chapter 3: Historical Perspective of Performance Management
Chapter 4: Goal Setting Theory and Expectancy Theory
Chapter 5: Performance Management Model and System

2
Performance Management
 Defining and Measuring
Performance

2
CHAPTER

Performance Management
 INTRODUCTION

In this chapter, we will present what is meant by

‘performance’ and the various dimensions of
performance. As we move further, we highlight the
need for managing performance and the factors
affecting performance together with the determinants
of performance. Further, various approaches used to
measure performance are also presented at the end.

4
Performance Management
 DEFINING PERFORMANCE
Performance management is, of course, about
performance. It is important to clarify what “performance”
means because if performance cannot be defined, it
can’t be measured or managed. There are different
views on what performance is. It can be regarded as
simply the record of outcomes achieved. (Kane, 1996).

On the other hand, performance is also defined as

behaviour (Campbell, 1990). A more comprehensive
view of performance, however, includes both behaviour
and outcomes (Brumbranch, 1988).

5
Performance Management
 NATURE OF PERFORMANCE

As noted above, performance, according to the most

acceptable definition, usually includes both
behoviours (what an employee does) and results (the
outcomes of an employee’s behaviour). Many
authorities on the subject agree that an ideal
performance management system should include
both behaviour (what employees do), and results
(what employees produce) or the outcomes of their
work.

6
Performance Management
 DIMENSIONS OF PERFORMANCE
Performance is multi-dimensional. It has many dimensions.
Performance is what is expected to be delivered by an
individual within a timeframe. What is expected of him could
be stated in terms of results, efforts, tasks, quality, etc, with
specifications of conditions under which it is to be delivered.
Thus, some of the important dimensions of performance are:
1. Output or result dimension
2. Input dimension
3. Time dimension
4. Focus dimension
5. Quality dimension
6. Cost dimension

7
Performance Management
Result and Output
The most acceptable, visible and measurable dimension of
performance is result or output. It describes the consequence of
input in a summary form or a final product or service form. It is
easily measurable.
Input Dimension
The input dimension relates to the activities or tasks to be
accomplished by the individual. Performance can be managed
better if the nature of the input required is planned properly and
implemented.
Time Dimension
Another dimension of performance is time. Performance can be
defined for a task, for a day, week, month, year or for life.
Performance management attempts to ensure maximum output
in a given period of time.
8
Performance Management
 Focus Dimension
Performance also has a focus dimension. The focus can
be on anything. For example, in defining the performance
of a sales executive, the focus of performance can be on
market share, net sales realization, or new areas covered.
Quality Dimension
Another dimension of performance is quality. Quality is
defined as ‘conformity to standards’. If the products
produced are of a good quality, then the performance of
individuals can also be said to be good.
Cost Dimension
Cost plays a critical role in performance. Individuals should
follow several cost reduction measures while performing
their tasks, and ensure that the cost of production is kept
low.
9
 DETERMINANTS OF PERFORMANCE
According to Aguinis (2007), performance is determined by
a combination of 3 factors:
(1) Declarative knowledge (2) Procedural knowledge and
(3) Motivation.
Factors Determining Performance

10
Performance Management
 FACTORS AFFECTING PERFORMANCE
Performance is affected by a number of factors, all of which
should be taken into account. These comprise: Personal
Factors: The individual’s skill, competence, motivation and
commitment.
Leadership Factors: The supervisor’s support,
encouragement and guidance.
Team Factors: The quality of encouragement, guidance and
support provided by team leaders and members of the team.
Systems Factors: The system of work and facilities
provided by the organization.
Contextual (Situational) Factors: Internal and external
environmental pressures and changes.

11
Performance Management
 APPROACHES TO MEASURE
PERFORMANCE
Employees do not perform in a vacuum. Employees work
in an organizational context in a specific situation,
engaging in specific behaviours that produce certain
results. For example, the same employee may behave
differently (and produce different results) if placed in a
different situation (e.g. working with a different manager or
using sophisticated equipment). Thus, there are three
approaches that can be used to measure performance.
These are:
1. Trait approach
2. Behaviour approach
3. Results approach

12
Performance Management
 Trait Approach
The trait approach emphasizes the characteristics of the individual
and ignores the specific situation, behaviours, and results. It
evaluates individual traits that remain fairly stable. For example,
performance measurement may consist of assessing an
employee’s intelligence and integrity at the end of each review
period. This approach may be most appropriate when an
organization anticipates drastic structural changes that will result in
the reorganization of most functions and the resulting reallocation of
employees.
Behaviour Approach
The behaviour approach emphasizes what employees do on the job
and does not consider their traits or outcomes resulting from their
behaviours.

13
Performance Management
 Results Approach
The results approach emphasizes the outcomes and results
produced by the employees. This is basically a bottom-line approach
that is not concerned with how the work is done as long as certain
specific results are achieved.
Behaviour Approach versus Results Approach

14
Performance Management
 End of Chapter 2
Thank you

15
Performance Management