Performance management can be defined as a strategic and integrated approach to delivering
sustained success to organisations by improving the performance of the people who work in
them and by developing the capabilities of teams and individual contributors.
Performance is about doing the work as well as about the results achieved. Performance can
therefore be regarded as behaviour – the way in which organisations, teams and individuals, get
the work done.
We can conclude that when managing the performance of teams, and individuals, both inputs
(behaviour) and outputs (results) need to be considered.
Difference between PerformanceAppraisal and Performance Management?
Performance Appraisal is only a component of Performance Management as it involves the
administrative and relatively isolated duty of measuring aspects of an employee’s performance.
Performance Management is a broader concept than Performance Appraisal in that it provides
not only for the measurement of performance, but the defining of performance according to
organisational goals as well as the provision of performance feedback.
Purpose of Performance Management
Performance Management is a means of getting better results from the organisation, teams and
individuals by understanding and managing performance within an agreed framework of planned
goals, standards and competence requirements.
It is a process for establishing shared understanding about what is to be achieved, and an
approach to managing and developing people in a way that increases the probability that it will
be achieved in the short and long term.
1 Performance Management has three essential purposes:
(i) Strategic purpose
A Performance Management system serves to link employee performance to the overall
organisational strategy and organisational objectives.
The strategic purpose may be achieved through designing evaluation mechanism which define
employee performance in terms of organisation’s strategy and goals.
Achievement of the organisation’s objectives.
Motivation of employees.
(ii) Administrative purpose
Performance Management systems provide information which assists organisations with
administrative decisions relating to issues such as salary administration (pay rises), lay-offs and
Pay related pay (increment, bonus).
(iii) Developmental purpose
Performance Management systems provide information about employee strengths and
weaknesses and in so doing, identify employee development needs
Identify Training Needs
2 Objectives of Performance Management
• To enable the employees towards achievement of superior standards of work
• To help the employees in identifying the knowledge and skills required for
performing the job efficiently as this would drive their focus towards performing the
right task in the right way.
• Promoting a two way system of communication between the supervisors and the
employees for clarifying expectations about the roles and accountabilities,
communicating the functional and organizational goals, providing a regular and a
transparent feedback for improving employee performance and continuous coaching.
• Identifying the barriers to effective performance and resolving those barriers through
constant monitoring, coaching and development interventions.
• Promoting personal growth and advancement in the career of the employees by
helping them in acquiring the desired knowledge and skills.
Approaches to Performance Management
(i) The ComparativeApproach
The comparative approach measures an individual’s performance by comparing his/her
performance to the performance of others.
Three techniques adopt the comparative approach:
1) Ranking : Supervisor ranking his subordinates from best performer to
2) Forced Distribution : Where employees are ranked in groups.
3) Paired Comparison : Where the supervisor compares every employee with every
other employee in the work group, giving an employee a
score of 1 every time he/she is considered to be t