ASSIGNMENT – BMPM5103

JANUARY SEMESTER 2010

PERFORMANCE MANAGEMENT

BMPM5103

ASSIGNMENT (45%)

Name : Tang Wai Kwan

Contact : tang.wai.kwan@simedarby.com / 012-238 2286

Student ID : CGS00422419

Course Code : BMPM5103

Performance Management is the process of measuring, evaluating, and rewarding the

performance of employees in an organization. Performance Management ensures that the

employees work and output, is in line with organization’s planned goals and objectives. It

involves rewarding the meritorious employees on the basis of their performance at work and

an approach to managing and developing people in a way which increases the probability

that it will be achieved in the short and long term.

In contrasting Performance Appraisal with Performance Management, it suggests that

performance appraisals are indeed an evaluation of an employees work, describes a

process of judging past performance and not measuring that performance against clear and

agreed objectives. However, Performance Management shifts the focus away from just an

annual event to an on-going process, reflects the continuous nature of performance

improvement and employee development, recognising the importance of effective

management, work systems and team contributions.

1
 ASSIGNMENT – BMPM5103

Performance management is an ongoing process. It never ends. Once established in an

organisation, it becomes part of an organisation’s culture. The performance management

process includes six closely related components.

Prerequisites

The first component of the performance management process involves two prerequisites.

First, there is a need to have good knowledge of the organisation’s mission. This knowledge,

combined with knowledge regarding the mission of one’s unit, allows employees to make

contributions with a positive impact on their unit and on the organisation as a whole. Second,

there is a need to have good knowledge of the job in question. A job analysis allows for the

determination of the key components of a particular job: what tasks need to be done, how

and what KSAs are needed. If we have good information regarding a job, then it is easier to

establish criteria for job success.

Performance Planning

The second component of the performance management process involves performance

planning. Performance planning includes the consideration of results and behaviour, as well

as a development plan. A discussion of results needs to include key accountabilities (i.e.,

broad areas for which an employee is responsible), specific objectives for each key

accountability (i.e., goals to be reached), and performance standards (i.e., what are

acceptable and unacceptable levels of performance). A discussion of behaviours needs to

include competencies (i.e., clusters of KSAs). Finally, the developmental plan includes a

description of areas that need improving and goals to be achieved in each area.

2
 ASSIGNMENT – BMPM5103

Performance Execution

The third component involves performance execution. Both the employee and the manager

are responsible for performance execution. For example, the employee needs to be

committed to goal achievement, and should take a proactive role in seeking feedback from

his or her manager. The burden is on the employee to communicate openly and regularly

with the manager. Also, the employee has a responsibility to be prepared for the

performance review by conducting regular and realistic self-appraisals. On the other hand,

the manager also has important responsibilities. These include observing and documenting

performance, updating the employee on any changes in the goals of the organisation, and

providing resources and reinforcement so that the employee can succeed and continues to

be motivated.

Performance Assessment

The fourth component involves performance assessment. Both the employee and the

manager must evaluate employee performance. Involvement of the employee in the process

increases his or her ownership and commitment to the system. In addition, it provides

important information to be discussed during the performance review. In the absence of self-

appraisals, it is often not clear to managers whether employees have a real understanding of

what is expected of them.

Performance Review

The fifth component involves performance review. This is when the employee and manager

meet to discuss employee performance; this meeting is usually called the appraisal meeting.

This meeting usually emphasises the past: what the employee has done and how. However,

an effective appraisal meeting also focuses on the present and the future. The present

involves the changes in compensation that may be a product of the results obtained. The

3
 ASSIGNMENT – BMPM5103

future involves a discussion of goals and development plans the employee will be expected

to achieve during the next review period.

Performance Renewal and Recontracting

The final component involves performance renewal and recontracting. Essentially, this

component is identical to the performance planning stage. However, performance renewal

and recontracting uses information gathered during the review period to make adjustments

as needed. For example, some new key accountabilities and competencies may be

included, or some goals may have to be adjusted either upwards or downwards.

Each of the six components of the performance management process plays an important

role. If any of these components is implemented poorly, then the entire performance

management system suffers. For example, lack of knowledge of the organisation’s mission

and the job in question (i.e., prerequisites) will not allow performance planning (i.e.,

performance roadmap) to be aligned with organisational goals. This in turn will lead to poor

performance execution.

If Performance Management is implemented correctly with specific objectives tied to the

strategic and operational plan, organisational performance outcomes will likely increase very

quickly. Employees that achieve the organisational goals are rewarded with favourable

reviews and bonuses in line with their performance and contribution to the organisation.

Performance management is a preferred tool used by companies in developing and training

their employees. Information about company positions, goals and compensation are

disclosed to individuals so they understand the importance to company operations.

Companies also give employees the framework for achieving bonuses and pay increases

4
 ASSIGNMENT – BMPM5103

from performance reviews. Hence, Key Performance Indicators (KPI) has been used by the

organization to define and measure progress toward organizational goals.

Key Performance Indicators (KPIs) are quantifiable measurements, agreed to beforehand,

that reflect the critical success factors of an organization and usually are long-term

considerations. The definition of what they are and how they are measured do not change

often. The goals for a particular KPI may change as the organization's goals change, or as it

gets closer to achieving a goal. Thus before any KPIs are selected, it is vital to identify what

the organization’s goal is, which are in turn dependent upon the it’s mission and its

stakeholders. Consequently, KPIs act as a measure of progress towards these goals.

Whatever they may be, they must be critical to the success of the organization.

Performance Excellence Programme (PEP) is the performance management system used

by my company. PEP is a methodology to convert and measure the organisation’s business

strategy into results through the allocation of Key Performance Indicators (KPIs) and

monitoring of Leadership Qualities (LQs). The allocation & alignment of KPIs is done at all

levels of the organisation i.e. Group, Division, Company, Department, and Individual. In

addition to KPIs, individuals are also measured through their LQs.

Performance Excellence Programme (PEP) cycles and processes are as below.

Performance Planning

Enables employees to identify key performance indicators (financial, operational, customer,

people) that will be measured during the financial year. Description, weightage and targets

(to be achieved in first and second half of the year) need to be included. Changes can be

made throughout the year to recognize specific circumstances i.e. change in role, additional

5
 ASSIGNMENT – BMPM5103

or reduction in responsibilities, change in business strategy/direction. Changes in KPIs must

be pre-approved and verified in the system by the manager.

Mid-Year Review

Enables employees to identify actual achievements up to the middle of the financial year.

Requires employees to input quantitative data (for KPIs) about achievements and provide

qualitative information to support level of achievement and to determine consistency level of

demonstration of identified leadership and behavioural indicators. Manager is expected to

verify information documented in the on-line tool.

Year-End Review

Enables employees to identify actual achievements up to the end of the financial year.

Requires employees to input quantitative data (for KPIs) about achievements and provide

qualitative information to support level of achievement and to determine consistency level of

demonstration of identified leadership and behavioural indicators. Manager is expected to

verify information documented in the on-line tool.

The Performance Excellence Programme (PEP) measurement and infrastructure will ensure

the following outcomes:

• Common understanding by employees at all levels within the Group in relation to

identified business strategies, plans and objectives.

• Clarity for employees about what is expected of them in relation to the type and level of

contribution that they should make towards the achievement of business success and

results.

6
 ASSIGNMENT – BMPM5103

• The deployment of relevant interventions which will assist and support individuals in the

acquisition or improvement of the right level of skills, knowledge and capabilities which

will facilitate their ability to perform in an effective and efficient manner.

• Rewards, recognitions and relevant consequences to acknowledge and differentiate

individual and team contribution towards achievement of business success and results.

The convoluted processes could be experiencing the shortcoming such as:

Risk of Internal Competition

Employees may compete with each other for job status, position and pay. This could amount

to backstabbing, failure among team members to communicate efficiently. It could lead to

dysfunction of the department and/or team, resulting in failure to achieve performance

standards.

Manager Dilemma

The manager is unable to perform his tasks efficiently because he spends too much time

supervising employees about their job functions. He is faced with value-based appraisal

systems. It becomes challenging and tough to decide value and performance indicators for

measurement. To avoid the overloaded information, the manager may wrongly tag a

common indicator across all the jobs with different requirements.

Too Much Reliance on Systems

The internet is rife with organizations offering e-appraisals which completely eliminate the

need for people to actually talk to each other. Somewhere, we have lost our way.

7
 ASSIGNMENT – BMPM5103

Poor Feedback

Feedback only flow top down from the manager to the employee being reviewed.

The deficiency of management processes can be refined by

• Linking individual employee objectives with the organisation’s mission and strategic

plans. The employee has a clear concept on how they contribute to the achievement the

overall business objective

• Focusing on setting clear performance objectives and expectations through the use of

results, actions and behaviours

• Defining clear development plans as part of the process, and conducting regular

discussions throughout the performance cycle which include such things as coaching,

mentoring, feedback and assessment.

• The employee and manager communicate more frequently and agree on changed

objectives to suit continuing changes in conditions and priorities. This is an inclusive and

collaborative process, which ensures that the employee has input and works towards

specific objectives that are relevant.

• Implementing 360-degree feedback system, a tool that help employees build new skills

and improve their performance in general by gathering and analysing performance

information from several sources including peers, superiors, subordinates and self.

Performance information gathered from self is compared with information gathered from

other sources to perform a gap analysis showing discrepancies between how one sees

8
 ASSIGNMENT – BMPM5103

one’s own performance vis-à-vis how others see one’s performance. This type of system

is also used to identify performance dimensions for which all, or most, performance

information sources agree there is little or great room for improvement.

By implementing a well-designed performance management systems could serve multiple

purposes and has many advantages.

• They serve a strategic purpose because they help link employee activities with the

organisation’s mission and goals, they identify results and behaviours needed to carry

out strategy, and they maximise the extent to which employees exhibit the desired

behaviours and produce the desired results.

• They serve an administrative purpose in that they produce information used by the

reward system and other HR decision-making (e.g., promotions, termination, disciplinary

actions).

• They serve an information purpose because they are the source of information for

employees to learn about their performance vis-à-vis the expectations.

• They serve a developmental purpose in that performance feedback allows individuals

to learn about their strengths and weaknesses, to identify training needs, and to make

better decisions regarding job assignments.

• From the perspective of employees, a good system increases motivation and self-

esteem, helps improve performance, clarifies job tasks and duties, provides self-insight

and development opportunities, and clarifies supervisors’ expectations.

9
 ASSIGNMENT – BMPM5103

• From the perspective of managers, good systems allow them to gain insight about

employees, allow for more fair and appropriate personnel actions, help them to

communicate organisational goals more clearly, let them differentiate good and poor

performers, and help drive organisational change.

In conclusion, performance management is a term used to improve team performance,

based on the six closely related components (Prerequisites, Performance Planning,

Performance Execution, Performance Assessment, Performance Review & Performance

Renewal and Recontracting). However, it can be manifest in very different forms depending

on whether the aim is to further improve good performers, or deal with underperformance.

10
 ASSIGNMENT – BMPM5103

Reference

University of California, San Diego, HR Department

Guide to Performance Management

http://www.hr.ucsd.edu/staffeducation/guide/guide2005.pdf

Duke University Health System, Duke HR

Performance Management Process

http://www.hr.duke.edu/payperformance/about_performance/planning.html

Brumback, G.B. (2003)

Blending “we/me” in Performance Management

Team Performance Management

An International Journal, 9, 167-173

Herman Aguinis (2007)

Performance Management

Prentice Hall Publisher

11