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Performance management and performance improvement


An effective performance management process enables managers to evaluate and measure individual’s performance and enhance productivity. Use of effective performance management system is crucial for any organisation. Proper performance management system can influence organisational success. It may or may not be directly tied to the employee’s compensation, but if the performance management system is not implemented properly it may cause harm to the organisation.

A proper performance management system will have a well defined performance appraisal system, which will be the summary of through-out-the-year dialogue between the individual and his manager.

A proper performance appraisal system should be first developed and then should get implemented correctly. Focusing only on an annual appraisal form will fail to bring out the benefits of performance management. There are organisations where multiple types of performance appraisal systems are necessary for the entire range of employees. For such an organisation if a single type of performance appraisal system is introduced it will be a failure.

A good performance appraisal system will establish a process for job relevant evaluation and will provide tool for measurable outcomes to support target-based or goal-based appraisal. It will also provide options for integrating performance appraisal with pay decisions, if wished.

Performance appraisal methods and approaches will differ from organisation to organisation. However, there are certain rules applicable to all organisations for doing a proper performance appraisal.

There are many organisations where performance appraisal process is linked with performance improvement plan (PIP), which is made effective immediately after the performance appraisal session.

Performance review

The performance review is expected to cover all the discussions that took place between an individual and the manager throughout the year. It will be based on the previously discussed goals and evaluation methods.

The manager should conduct performance discussions with the employee regularly, which may happen every month or even every week. The employee should not hear positives or negatives about his performance for the first time at the time of final performance appraisal session.

A regular feedback on the performance will help the employee to put up positive effort on performance.

Proper target or goal setting is most important for proper performance review. Once the targets or goals are set, the employee would know what is expected from his or her end.

During target or goal setting, there must be clear plan on how the targets or goals will be evaluated. It may be useful to discuss with the employee about the evaluation process.

Sharing performance review format with the employee at the time of target or goal setting is necessary to avoid surprises at the end of performance review time period. It is also important to let the employee know how the organisation will assess performance and the employee should understand what are expected from a performing employee.

If a system to rate all employees in five or six point scale is followed, then the employee must have clear knowledge about the rating scale – so that he or she is able to perform to become an outstanding employee.

Generally, a performance appraisal discussion begins with the discussion on the positives and negatives of recent events. But, it is very important to look at all event occurrences e.g. project completions, successful launchings, missed deadlines, cost over-runs, etc. during the entire period of review. To make this happen the manager and the employee should maintain a record of all such occurrences.

Obtaining feedback about the employee from colleagues, his co-workers  and any reporting staff will broaden the performance information about the employee. This is slightly tricky and should be started in formal way much before the final meeting with the employee.

Always plan the performance appraisal meeting in advance and keep the employee informed about the meeting. For a good performance appraisal meeting, preparation for the meeting is very important.

One should never go into a performance review meeting session without preparation. If done, the main purpose on performance review cannot be achieved. It will have negative effect because the manager will miss key opportunities for feedback on improvement and the employee will not feel encouraged about his success.

During the meeting, the manager should spend time on the positive aspects of the employee first, and followed by the negatives aspects. In most cases, the discussion of the positive components of the employee’s performance should take more time than that of the negative components. Normally there will not be any employee whose performance is completely negative. If this is found, then there is some serious matter to address. It is important to talk directly with underperforming employees so that they understand that there is seriousness of the performance situation.

Finally, the key driver of a performance appraisal meeting is conversation. The conversation should happen in a friendly way and the employee should never feel as if he was treated badly. The manager should allow the employee to talk, and should listen to his or her views.

                                                       Performance management process workflow diagram

Some tips for better performance management

Make the employee motivated and excited about his ability to continue to grow, develop and contribute.

Allow the employee to talk during the performance management discussion session – better if the employee is allowed to talk more than half of the time.

Ask some questions which will encourage the employee to talk.

Some typical questions, which may be asked, are:

  • What do you expect to be most challenging about your goals for this period?
  • What support the department and I can provide for you so that you can achieve the goals?
  • What are your hopes for your achievements this year?
  • How often would you like to receive feedback?
  • What kind to meeting schedule can we set up so that you don’t feel you are being micro-managed – at the same time I receive from you feedback on your progress?
  • What would be a useful agenda of one-to-one meetings?