The Performance Management Process and How Its Implemented In An Organisation
Prepare a report . Below are the details:
Topic: Explain the performance management
process and how it should be implemented in the
organizations
– Must be typed on one side of the paper only.
– Pages are to be consecutively numbered.
– Minimum 6 references.
– 17 pages for the report and 10 slides for the PowerPoint.
Solution
Introduction
The main purpose of an organization is to make profits and offer goods and services for
which it was started. Human resources are in charge of completing the above goals and
objectives. The owners of a business monitor the progress being made by their ventures in
different ways such as evaluating the returns of a certain year as compared to the previous years.
Through this process of evaluation they can weigh the performance of their managers and
subordinate employees. This process involves planning for the evaluation of the contribution of
specific employees to the overall performance of the business. Employees are informed of the
particular goals of the organization and in most cases; different departmental heads also inform
their unit employees of their specific goals. The final product is the achievement of departmental
PERFORMANCE MANAGEMENT PROCESS 5
and organizational goals simultaneously which can be used to evaluate the performance of
departments and the organization in general.
The performance management process is characterized in the same way for most of the
companies. However, depending on the size and complexity of a company, this process could
involve either a small or big number of individuals. The management calls upon the assistance of
the business owners in establishing stages of the process since they are the original setters of
goals to be achieved by their business. Employee performance management is the basis for the
successful management of human and economic resources as it mainly entails holding employees
accountable for all their actions. In the same process, employees are allowed to air their views
regarding different aspects of the organization giving them the chance to participate better in the
final product of the organization. This report is aimed at giving an outright explanation of how
the performance management process is implemented in an organization.
4. Background of Performance Management
Understanding the concept of performance management requires reviewing the historical
background which dates more than 60 years ago. Performance management started in the form of
informal appraisal in the early 1900s. The second stage of performance management involved
the measurement of personality based skills which ended up being unreliable and was later
replaced by an appraisal technique that measured attainment of objectives by individuals as
opposed to their personalities. The success of this technique was higher as compared to the
previous two methods. As knowledge progressed and more businesses were opened up the
techniques for measuring performance involved more factors such as educational achievement,
attitudes, personality traits, skills and abilities.
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The early 2000s saw the advent of more advanced performance management methods
which administered a more holistic approach. The focus was on engaging employees through
motivation. In this method, companies upheld the aspect of communication and teamwork as
well as conflict resolution tools to ensure that the employees worked towards achieving the same
goals. Performance management has been improving up to the modern day, where feedback
systems are the newest features of this concept especially in the current organizations. A further
advancement has been brought about by the technological improvement especially through the
use of mobile technology which supports faster and more reliable feedback system. In the current
business world the phrase Human Capital Management is used to mean the same as performance
management.
5. Performance Management Process
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Figure 1
5.1. Planning
PERFORMANCE MANAGEMENT PROCESS 8
Figure 2: SMART Goal setting
5.1.1. Goals and objectives setting
In planning, executives of an organization are involved in three activities. Leaders
establish the goals to be met by members of each department and those to be met by the whole
organization (University of St. Thomas Human Resources Department. n.d). Through this
process the leaders are supposed to set goals that are specific, measurable, attainable, relevant
and time-bound as illustrated in figure 2.
The organization sets objectives that could be general or specific. However, easy
attainment of goals is made possible when the management is well aware of exactly what they
want for the organization. For instance, deciding that the company should be in a position to
make about 10% more profits than the previous year that will be a specific goal. Such
communication will make employees work hard towards achieving that specific objective. In the
same case, that aspect indicates the measurability of the objective in which employees will know
PERFORMANCE MANAGEMENT PROCESS 9
the amount of efforts they should put in their work considering their past experiences and efforts.
In making the decision about the objectives to be met the management should consider their
attainability. For instance, 10% more profits may be a percentage way too high for a company
that is facing extreme competition, yet too low for a monopoly. If the management decides to use
this percentage in a competitive environment to measure the performance of its employees then it
will be unfair and they could lay off employees who are performing well in the company. Figure
3 shows the profits earning of company A for the past three years in which the 10% profits
increase can be attainable. However, the chances of attaining the same percentage of profits for
company B are quite low considering the past performance.
Figure 3: Percentage of Profits in Companies A and B
In setting objectives the management should also consider their relevance to the
employees. Employees tend to focus more on what they are more informed about, for example,
through the increment of profits workers know that their salaries or wages will also increase even
PERFORMANCE MANAGEMENT PROCESS 10
by a small margin. The relevance of the profits’ goal is thus relevant to most of the employees
and their performance can be measured or evaluated using it. The management should also set
goals that are time-bound. For example, they can specify that the 10% profit increment is
expected in the financial year 2016/2017. In this case the management has given the employees a
specific time in which to work on and evaluate their performance.
5.1.2. Matching of Individual Goals with Organizational Goals
The second activity that the management conducts in the planning stage is to match the
individual employees’ and departmental goals. The achievement of goals may be a tough task if
the individual goals of the management and employees are not in line with the organizational
goals. For this reason, the management has a role to play in making their subordinates
understand that the goals of the overall organization should be met together with individual and
departmental goals. Measuring performance in this case will depend on how much the employees
have contributed to the attainment of the organizational goals. Attainment of departmental goals
conforms to the organizational goals thus if employees work hard to achieve the goals of their
departments they will be working hard to meet the objectives of the organization.
5.1.3. Determination of Criteria to Use in Measuring Performance Level
The third activity in planning is for the management to determine the criteria to use in
measuring performance level. Executives follow certain routine steps in determining the
performance level of their subordinates. The uniformity of these steps from one employee to
another is of utmost importance as biasness would only mean that some employees will be
undeservingly appraised and others will be laid off unfairly. Therefore, the management comes
up with the set of rules to guide the process of performance determination for all employees.
Owners of the business consider various factors in this activity. For example, natural and applied
PERFORMANCE MANAGEMENT PROCESS 11
skills such as abilities and the education levels of different employees can be used in evaluating
and determining their performance. It is also important to include the availability of different
resources at different times because in the current world, the failure of technological appliances
can lead to low performance of employees in the technical departments.
5.2. Assessment
The assessment process involves various aspects some of which have already been
mentioned. Assessment entails considerations of the various skills and abilities of employees and
the resulting outcome. Interactions of employees and the customers is also an assessment tool
with which organizational values can be demonstrated. Employees are assessed in relation to
their compliance with company policies and their respect towards the organizational structure.
As demonstrated in the organizational structure in figure 4 employees answer to the employees
above them with executives answering to the Chief Executive Officer or the owner of the
business (University of California, Berkeley, n.d, p. 7). The role played by the management and
the owner of the business is to assess the performance of the subordinates and the overall human
resources of the business respectively. However, achievement of the employees should not be
affected by their level in the organizational chart which is illustrated in figure 4.
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Figure 4: Organizational Chart
The purpose of appraisal is to improve the level of employees from the lowest to the
highest based on the results of their assessment. The appraisal period for most companies is
usually one year which is recommended to promote the level of employees’ performance.
Leaders arrange for an appraisal meeting before which they review and consider the hard work,
efforts and contributions of different employees. Assessment of employees should be continuous
and is usually a primary responsibility of supervisors (University of St. Thomas Human
Resources Department. n.d. p. 5-10). Assessment has the purposes that are explained below.
5.2.1. Assessment Encourages Employee Involvement
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Employees get involved through appraisal and other performance management processes.
The employees have a role to play which depends on their level in the organizational chart. For
instance executive employees and supervisors are in charge of guiding their subordinates by
communicating to them about the goals of the company which should be achieved by the end of
a certain financial year. The subordinate employees on the other hand get involved in the filling
of the performance assessment form where they interact with the executives in facilitating the
decision making process. Employees in other companies are given a system where they can
conduct a self- assessment process. In this process, the employees use their job profiles and
performance plan which keeps them completely involved in the overall assessment. Executives
open discussions with their subordinates to let them know of their duties in their specific units
and allow them to give their opinions on how they think their work should be conducted in the
future.
5.2.2. Assessment Is a Formal Mechanism for Employees to Receive Feedback
The assessment process involves discussion between the executives and the subordinates.
This implies that the employees get a formal platform to air their views or opinions about the
changes that should take place in the organization. In the same discussions employees get
clarifications regarding their performance and their past conduct. Through assessment therefore,
employees get a better understanding of their work based on the feedback they get from their
employers and they can compare their results to the past ones after which they set out on a
mission to make better results in the coming years. Apart from the parts that the employees have
not been able to achieve, employers give credit owing to the achievement of the different
organizational goals made possible by specific employees. For this purpose to be effectively met,
the executives or employers should enhance their communication skills such that they listen to
PERFORMANCE MANAGEMENT PROCESS 14
employees attentively without interrupting them, encouraging participation of the employees and
avoiding misjudgment and biasness.
5.2.3. Assessment Gives a Documented History of Employee’s Performance
Since assessment is a continuous process, the employees of the company can be able to
revisit their performance as documented from the beginning of their contract working there as
well as the progress they have been making. When the company’s leadership wants to appraise
the employees, they review the documented history of the employees’ performance assessment
results from which they can establish the basis for either appraising or not. Such history can be
used in many ways such as measuring the overall individual achievement of goals for certain
employees and determining the chances that an employee has for promotion to a higher level in
the organizational chart. The historic documentation can further propel the employee’s chances
of getting better opportunities in their career depending on how appealing their information looks
to the future employers. Most employers are in search of goal oriented and successful employees
who will facilitate easier attainment of the organizational objectives. Through the documents
also, employees’ added experience and skills through training are made known to the current and
possible future employers.
5.2.4. Assessment Is the Basis for Awarding Salary Increases
Assessment can be the basis for future salary increments based on various factors.
Employees are given the opportunity to air their views on different areas, including the salaries
they should receive and how much percentage it should be. Through assessment, performance
appraisal including salary increment is possible if the employee is found to be performing
exemplarily. Suppose an employee is promoted from one level of the organizational chart to
another most companies have an automatic pay increase. Hence the assessment process should
PERFORMANCE MANAGEMENT PROCESS 15
improve performance management through the increase of salaries for employees in all levels.
Through the achievement of specific and general goals, employees aim at having more salaries
owing to the fact that the company is expected to get more returns as compared to the previous
moments. Since assessment takes place on an annual basis it is thus possible that most companies
add salaries for their employees every financial year which means that they are socially
responsible to the increasing economic needs of their employees.
5.3. Recognition
Business owners and executives should be involved in the aspect of recognizing
outstanding performance among their employees. According to United States Department of
Agriculture, (n.d), for performance management to be more effective recognition should be done
in a timely manner. Employees in some cases are advised to initiate meetings with their
employers if the employers are hesitant to recognize and appraise their outstanding performance.
Employers also encourage their employees to advocate for their own recognition by performing
exemplarily and continuously assessing themselves. Hall, (n.d), states that through recognition
employers will be able to retain most of valuable and reliable employees as well as improving
the performance of those employees. Recognition takes two different forms; formal and informal
recognition.
In a formal recognition model a specifically designed structure that is responsible for
enhancing unity among the members of the organization through communication in advance
about the different goals of the business. Informal recognition process on the other hand may not
have influence on a big number of employees as compared to the formal model and its
occurrence is seen fewer times and not on a daily basis. Informal recognition serves many social
responsibility purposes such as employees being of much assistance to their colleagues who
PERFORMANCE MANAGEMENT PROCESS 16
could not make to achieve their goals due to unavoidable circumstances like sickness. The
outcome of informal recognition is seen in the employees’ need to be of service even through
voluntary work. Employees who are recognized will always go an extra mile in trying to achieve
more than what they did at a certain period. For this reason, recognition as a performance
management tool should be done in a way to motivate employees to be their own bosses or
supervisors.
Benefits that accrue to an organization that implements recognition process include the
utilization of employees’ ideas in reduced costs. Employees tend to give their opinions that could
be taken as better ideas with or without their knowledge. Through this the employees can get
little consideration and the company will benefit from not spending much of their savings. At the
same time, the employee will be recognized and promoted in which process they are entitled to
specific bonuses and salary increments. These are what recognition entails; sharing of ideas to
save money and other economic resources and employee promotions and bonuses. Continuous
recognition also facilitates in the employees’ development of trust as they know the employer
counts on them to perform and they will finally be appraised. Recognition may not be deemed
complete without the rewarding step. Some companies create public events for awarding
members with trophies and other economical considerations which are highly encouraged as it
makes the members who have not achieved yet to long for those awards (University of St.
Thomas Human Resources Department. n.d. p. 5-10).
5.4. Career development
Organizations participate in the long term process of improving their employees’
abilities, skills, experiences and educational expertise. The process is aimed at making a better
future for the employees and the overall organization. Through career development the
PERFORMANCE MANAGEMENT PROCESS 17
organization natures current subordinates into the future leadership team. The process takes
different forms such as practical and theoretical career development processes. Positive career
development helps in shaping personally determined workforce and the performance is
ultimately enhanced. An organization that carries out career development programs is destined to
succeed because employees will always learn new ways of overcoming the emerging challenges.
The emergence of new techniques for improving the working conditions and discussions of
ethical practice are made possible in the career development process where focus of the business
and its employees to satisfying the customer needs (Goetsch, and Davis, 2014). According to
University of St. Thomas Human Resources Department (n.d. p. 5-10), the purpose of career
development processes is to address the issues that bring about poor performance and increase
the opportunities for good performance among employees. Career development is based on the
activities explained below.
5.4.1. Individual Development Plans (IDP)
IDP is a process that facilitates employees to monitor their progress in attaining their
individual long term and short term goals in the organization. Through this tool the employees
can be able to improve their current performance by evaluating their past (Fuhrmanh, et al,
2015). The tool is aimed at making employees establish more attainable career goals for their
own personal benefit. An organization should help employees to make and meet their personal
goals in the performance management process as this will make them achieve organizational
goals in the long term. The organization should participate in helping individuals to improve
their different careers in all fields to ensure that every department will be well represented in
performance. For example, through IDP marketing skills will be examined by a marketing
employee and in the same period skills for a production employee will be examined. The
PERFORMANCE MANAGEMENT PROCESS 18
implication is that the marketers will always have products to market because the production
employees have been individually developed. IDP consists of exercises that help employees to
examine skills and abilities they possess, evaluation of different careers that the employees can
fit in and guidelines for effective goal setting. IDP also includes the resopurces used by the
employees in the performance management process.
5.4.2. Training
For total quality management the organization identifies training as one of the major tools
to guide the performance management process. According to Goetsch, and Davis, (2014p. 6),
quality is measured in various aspects such as the products manufactured, services offered, levels
of processes, environmental factors and human resources that make the products and services
available for customers. The dynamic nature of quality is also expressed which necessitates
training for all employees. Training goes in line with one of the primary functions of the business
which is to satisfy the needs of all customers by giving them quality services and goods. An
organization that upholds training improves its quality and increases its competitive advantage.
Through training the company is in a position to offer better services and is thus entitled to
getting a higher value in terms of returns.
Technological advancements have necessitated the need for training sessions as new
machines which are more complicated. The process of training is thus continuous since
technology keeps improving and needs of customers and employees keep increasing. An
organization should thus implement training activities as part of performance management which
ensures that the quality of services and the skills of its employees are improved. Successful
businesses uphold the importance of training for their employees and the ultimate return is a
globally competitive organization due to the improved quality of the overall performance.
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Training helps in reducing the passiveness of employees as they get involved in the continuous
management involvement and suggestions to the improvement that could be made possible in the
whole organization. Through training the company develops a spirit of teamwork which can also
be used as a technique for measuring performance of employees. Employees who undergo
training have a sense of belonging that makes them partial owners of the business and this
improves the quality of the services they offer. The ultimate result is good performance which is
the target of every business organization. Training also helps in keeping employees engaged and
they get the opportunity to develop their careers continually. Training as explained by Gruman,
and Saks, (2011, p. 123-136), helps in promoting efficacy of employees which is the major goal
of effective performance management.
5.4.3. Talent Enhancement
Performance management should be involved in developing talents of employees. Some
employees may not be aware that they have special talents but through effective performance
management they get the opportunity to realize themselves (Cell, n.d). A good performance
management system helps local talent development through economic contribution of the
employers. Through talent enhancement the main role of the business is served, that is, customer
focus. Talented employees who find proper career development opportunities are creative and
can thus help the organizations they work for in new and advanced competitive strategies. Career
enhancements help the employees in their job seeking tasks and possible self-employment
chances.
The work of talented employees and through which they are appraised is to innovate
competitive programs that can be used by the company in short term and long term. A good
performance management system can also help the employees to acquire talents through various
PERFORMANCE MANAGEMENT PROCESS 20
channels. For example it has been possible for employees to acquire talents through participation
in social media, an opportunity which has been brought about through the organizations’
recruitment and advertising activities. In some organizations leaders entrust some activities to
their subordinates and eventually they acquire the talent through continuous conducting of those
activities. The organizations are also well equipped with mentors to guide the young talent
holders and eventually such young people who could possibly be college graduates end up
improving the overall performance of the organization.
5.4.4. Leadership
Gruman, and Saks, (2011, p. 123-136) identify leadership as a fundamental constituent of
performance management. The performance of leaders is evaluated before considering the
evaluation of the subordinates’ performance. Leaders are involved in decision making for the
goals of the business and they are therefore the beginning of the performance management
process. The planning stage in the performance management process is characterized by goal
setting that takes the SMART format. Through good leadership that is enhanced in career
development leaders help their subordinates in becoming future and more enhanced leaders.
Visionary leaders are believed to be more successful in influencing employees because they set
good examples for such employees. Employees get more involved or engaged in the performance
process where they can find good values to emulate in their leaders. This helps further in the
career development process of all employees. Leaders are the main source of resources that
facilitate the working of employees and without which the employees would not perform well.
6. Importance of Performance Management
Good performance management systems are the basis for the organizations’ uniformity in
terms of working towards achieving common goals. The goals of the organization and different
PERFORMANCE MANAGEMENT PROCESS 21
departments are communicated which gives the employees an overview of what they are
expected to accomplish individually and as a team. In the long term the business reflects the
outcome of achieving the common goals. Employees are also informed of what their job expects
through the performance management process. Supervisors have the duty to inform their
subordinates regarding the goals of the organization and the specific roles they should play in
achieving the goals. At the same time they communicate the performance criteria that are used to
determine their appraisal process. In this case they help to minimize ambiguities which can lead
to low employee performance. Business owners and their management teams stipulate the
quality that is expected in different aspects of the business. Employees use the communication to
translate what is expected of them in performing various tasks which means they find out the
results expected from them. The performance management process is a platform where
employees get to help their leaders in making goals that are attainable based on their own
experiences.
Performance management helps in the continuous generation of feedback in the
organization. Employees and their leaders identify, analyze and evaluate their strengths and
weaknesses. According to The importance of Performance Management, (n.d), performance
management allows for employees to give their views and opinions about the management
freely. This helps in improving the working conditions of the employees because pressures are
limited and the employees can speak about what keeps them uncomfortable and they think it can
be solved. The feedback generation process is continuous due to the continuous nature of
performance management. The implication therefore is that problems are solved continually with
no accrual of permanent problems. In the long term the company is propelled to make better
advances owing to the fact that no challenges are pulling it behind.
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The performance management process includes a stage for solutions to poor performance.
In this case remedies concerning what could be done are discussed and evaluated by
organizational leaders. Recommendations on what could have been done in all the stages of
performance management are given so as to improve the outcome in the next season or period.
For example after evaluating the previous period’s goals, the management may find out the goal
was not attainable and thus using it in the performance management process would make it
unreliable. Therefore, a slight change or alteration in the goal might be done so as to improve the
performance level of the different employees. Attainment of the previously set goals through
good performance makes the company to set better and more advanced goals considering the
abilities of their employees.
Through performance management employees with outstanding results are rewarded.
Rewarding employees gives them the determination to become better and ultimately they work
towards the success of the business. Employees are motivated to advance in their career which
promotes the overall quality of goods and services provided at a global level. Giving the
employees an extra or higher role is another form of rewarding them and it ultimately assists in
making them responsible leaders who can be relied upon in their leadership position. The respect
accorded to leaders is upheld because they are part of the team that evaluates and appraises good
performance. The long term results of a business that sticks to a good inclusive performance
management process are improved performance and reliable workforce as the abilities of every
employee are well known to the business owners. The results are made even better through the
final process, which is career development for all employees.
7. Recommendations
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An inclusive performance management process is required in making the performance
evaluation complete and fair. Organizations should be consistent in measuring the performance
of their employees. Training and development should be encouraged in all organizations
regardless of their size and composition as the resultant aspect is competition with global
companies. The quality of services and goods that are offered by employees due to their
performance should be used because the success of a business is determined in its ability to
satisfy the needs of the customers. The leadership of a company should consider every aspect of
contribution that is made by an employee so that the rewarding process will be fair to all the
employees. Business owners should review the performance of their employees in a timely
manner to ensure they do not miss out any details in any season. The performance management
process should be followed up in intervals so that the management can make changes before
wasting resources and time and finally finding no good returns.
8. Conclusion
Performance management is the process by which business owners create objectives to
guide the working of their employees. The process is characterized by four major stages;
planning, assessment, recognition and career development. In the planning stage the management
set the objectives to be implemented and which are used in assessing the performance of
employees. Employees who indicate exemplary performance are recognized and rewarded in
various ways such as bonuses or promotion to a higher level in the organizational chart. The final
stage in performance management involves career development where the skills and abilities of
employees are improved through theoretical and practical training sessions. The performance
management process has the importance of improving the performance of all employees if
administered fairly because it keeps the employees engaged and their employer can monitor their
PERFORMANCE MANAGEMENT PROCESS 24
progress. A continuous performance management process is highly recommended as it helps the
owners of the organization in saving resources as changes can be made in the right time.
9. References
Cell, A. (n.d). Workforce Development Agency). Retrieved from;
http://www.michiganbusiness.org/cm/files/events/tribal_forum/talent-enhancement.pdf
Fuhrmanh, C., Lindstaedt, B., Hobin, J., Clifford, P., (2015) Individual Development Plan.
Retrieved from; http://myidp.sciencecareers.org/
Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence.
pearson. Retrieved from; http://abufara.com/abufara.net/images/abook_file/back/Ch1.pdf
Gruman, J. A., & Saks, A. M. (2011). Performance management and employee
engagement. Human Resource Management Review, 21(2), 123-136. Retrieved from;
https://scholar.google.com/scholar?q=+the+performance+management+process+&btnG=
&hl=en&as_sdt=0%2C5&as_ylo=2011&as_yhi=2016
Hall, R., (n.d). The George Washington University. Retrieved from;
https://hr.gwu.edu/recognition-toolkit
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The importance of Performance Management , n.d. retrieved from;
https://www.fsa.usda.gov/Internet/FSA_File/perf_mgmt_09_email1.pdf
United States Department of Agriculture, (n.d). retrieved from; http://www.fsa.usda.gov/about-
fsa/human-resources/new-employee-orientation/employee-recognition-and-performance-
management/index
University of California, Berkeley, n.d. Performance Management Toolkit. 7 Retrieved from;
http://hrweb.berkeley.edu/files/attachments/Performance-Management-Toolkit.pdf
University of St. Thomas Human Resources Department. (n.d). Performance Assessment And
Management Guidebook For Staff. 5-10. Retrieved from;
https://www.stthomas.edu/media/humanresources/compensation/PAMGuidebook.pdf
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