HR Paper 2 Module 1 INTRODUCTION TO PERFORMANCE MEASUREMENT .pdf

Copyright © 2023 Jayanti Rajdevendra Pande. All rights reserved.
RASHTRASANT TUKDOJI MAHARAJ NAGPUR UNIVERSITY
MBA
SEMESTER: 3
SPECIALIZATION
HR
SUBJECT
PERFORMANCE MEASUREMENT SYSTEM
MODULE NO : 1
INTRODUCTION TO PERFORMANCE MANAGEMENT
- Jayanti R Pande
DGICM College, Nagpur

Q1. Explain the Concept of Performance Management (PM). Describe the essence of PM.
Performance Management (PM) refers to a systematic approach aimed at enhancing the individual performance of employees
to contribute effectively to organizational goals. It involves processes, systems, and tools designed to measure, manage, and
improve the performance of individuals and teams within an organization.
THE ESSENCE OF PERFORMANCE MANAGEMENT
1. Continuous Process: PM is not a one-time event but an ongoing process that involves regular feedback, assessment, and
development of employees. It's a continuous cycle of planning, monitoring, developing, and reviewing performance.
2. Shared Responsibility: PM is not solely the responsibility of managers or HR professionals. It involves active participation and
collaboration between managers, employees, and various teams or departments within the organization.
3. Management by Mutual Contract: Unlike traditional top-down approaches, PM emphasizes a collaborative approach where
both managers and employees mutually agree upon performance objectives, goals, and development plans.
4. Strategic Focus: PM is aligned with the broader strategic objectives of the organization. It aims to improve organizational
effectiveness, align individual goals with the company's mission, and contribute to its growth and success.
5. Integration: PM requires integration both vertically and horizontally within the organization. Vertical integration aligns
individual performance goals with corporate strategies, while horizontal integration ensures coordination and alignment
across various functional areas or departments.
• Vertical Integration: Focuses on aligning measures up and down the organization, connecting corporate strategy with
financial, customer, internal process, and employee-related measures.
• Horizontal Integration: Concentrates on aligning measures across different organizational functions like procurement,
marketing, sales, customer service, logistics, production, and accounting to ensure consistency and collaboration across
departments.

Q2. State the difference between Performance Appraisal (PA) & Performance Management (PM)
Serial No. Performance Appraisal (PA) Performance Management (PM)
1. Focuses only on individual objectives.
Focuses on organizational objectives and individual
goals.
2.
Nature of performance is qualitative and
quantitative.
Emphasizes skills and competencies required for
performance.
3. Conducted annually. Conducted continuously and consistently.
4.
Ratings are assigned by the manager to
subordinates.
Involves combined and collective discussions on
performance.
5. Often tied to monetary benefits.
Does not have a direct reward system as its primary
focus.
6. Usually conducted by the HR department.
Conducted by line management and involves all
stakeholders.
7.
Operates as a separate process from org.
development.
Integrated approach focusing on both individual and
org. growth.
8.
Has a reactive approach, based on past
performance.
Takes a proactive approach, aiming to improve future
performance.
9. Primarily focuses on providing feedback.
Involves discussions regarding future tasks and
development plans.
10.
Lacks continuous monitoring and improvement
mechanisms.
Involves ongoing monitoring and development for
continual growth.

Q3. Describe Performance Management Cycle.
The Performance Management Cycle is a systematic process used by managers and organizations to continuously manage and
improve employee performance. It typically involves several stages or steps to effectively evaluate, develop, and support
employees in achieving their goals aligned with organizational objectives. Here's an elaboration on each stage:
PLANNING
(PLAN)
ACT
(DO)
MONITOR
(CHECK)
REVIEW
(ACT)
Performance Management
Cycle
along with
William Deming’s Model
[Plan-Do-Check-Act]

Stage 1: Planning (Plan)
Both the employee and supervisor collaborate to set specific, measurable, achievable, relevant, and time-bound (SMART)
objectives. These objectives are linked to the organization's broader goals and mission. This stage encourages open discussions,
allowing employees to express their needs, concerns, and expectations regarding their roles, responsibilities, and career
aspirations.
Stage 2: Action (Do)
Once the objectives are agreed upon, employees start executing their tasks and responsibilities as per the plan. Managers
provide necessary guidance, support, feedback, and coaching to help employees perform their jobs effectively. Colleagues may
also contribute to support each other in achieving common goals.
Stage 3: Monitor (Check)
Managers monitor and evaluate the employee's performance against the predetermined benchmarks or goals. Recognizing
areas of underperformance as well as strengths helps in understanding where improvements are needed or where additional
support can be provided. Regular reviews and feedback sessions are conducted to discuss performance, identify development
needs, and create plans for employee growth and improvement.
Stage 4: Review (Act)
Both the employer and employee engage in discussions to review the progress made towards achieving the set objectives. The
main purpose of the review is to identify any necessary adjustments or support needed to facilitate goal attainment.
Employees also provide feedback on the type of managerial support required to better accomplish their tasks and fulfill their
responsibilities effectively.
This cycle continues as a continuous and iterative process, allowing for ongoing development, adjustments, and improvement
in employee performance while fostering open communication and alignment with organizational objectives. By following these
stages, managers aim to enhance job satisfaction, employee growth, and overall organizational effectiveness.

Q4. Discuss principles of Performance Management.
These PRINCIPLES OF PERFORMANCE MANAGEMENT serve as guiding values for organizations to effectively manage
performance by ensuring alignment with organizational objectives, fostering transparency and communication, setting clear
expectations, measuring progress, and providing continuous feedback for improvement and growth –
TRANSLATION
Translation of corporate
objectives into team,
departmental & individual
objectives.
CLARIFICATION
Clarity of organization.
goals & objectives is
facilitated to all
employees.
COMMUNICATION
Transparent & honest
communication between
manager & employees is
needed.
MEASUREMENT
Performance are
evaluated & measured as
per mutually agreed
objectives.
FEEDBACK
organization should have
well established feedback
system and continuous
monitoring.

1. Translation
Translation of Corporate Objectives: This principle involves aligning and translating broader organizational objectives into specific,
measurable, achievable, relevant, and time-bound (SMART) goals at team, departmental, and individual levels. It ensures that
every employee understands how their role contributes to the overall organizational objectives.
2. Clarification
Clarity of Organizational Goals: It emphasizes the need for clear and transparent communication of organizational goals and
objectives to all employees. Clarity helps employees comprehend their responsibilities and how their work contributes to the
bigger picture, fostering a sense of purpose and direction.
3. Communication
Transparent and Honest Communication: Effective communication between managers and employees is crucial. It involves open,
honest, and consistent communication channels that facilitate discussions about performance expectations, progress,
challenges, and feedback. A transparent communication culture promotes trust and understanding.
4. Measurement
Evaluation Based on Mutually Agreed Objectives: Performance should be evaluated and measured based on the objectives set
collaboratively between managers and employees. Clear and agreed-upon performance metrics allow for fair assessment and
alignment with organizational goals.
5. Feedback
Established Feedback System and Continuous Monitoring: An organization should have a structured feedback mechanism in place.
Continuous monitoring of performance, regular feedback sessions, and constructive criticism help in recognizing achievements,
identifying areas for improvement, and supporting employee development.

Q5. Explain Importance & Limitations of PMS.
IMPORTANCE OF PMS
1. Conflict Reduction and Improved Performance: PMS can mitigate conflicts among peers and subordinates by setting clear
performance standards, leading to improved collaboration and better performance outcomes.
2. Enhanced Motivation: When employees are aware of their performance expectations and have clear goals, it boosts their
motivation to excel in their roles, leading to increased productivity.
3. Organizational Performance Improvement: By aligning individual goals with organizational objectives, PMS contributes to
overall organizational success, retention of skilled employees, and improved productivity levels.
4. Employee Retention and Loyalty: Motivated employees tend to be more loyal to the organization. Effective PMS can help
identify and retain valuable employees by recognizing and rewarding their contributions.
5. Job Satisfaction: When employees feel that their efforts are recognized and rewarded fairly, it contributes to job satisfaction
and a positive work environment.
LIMITATIONS OF PMS
1. Favoritism and Bias: Managers might exhibit favoritism towards certain employees, causing dissatisfaction and demotivation
among other team members. It can lead to unfair evaluations and affect overall morale.
2. Managerial Time Consumption: Monitoring and managing the performance of employees can be time-consuming for
managers, diverting their attention from other important managerial duties.
3. Internal Competition and Lack of Collaboration: An excessive focus on individual performance may foster an environment of
intense internal competition, hindering teamwork and effective communication among employees.
4. Costly and Administrative Burden: Implementing and maintaining a comprehensive PMS can be resource-intensive in terms of
time, effort, and costs associated with training, software, and administrative tasks.

Q6. Explain challenges of Performance Management
CHALLENGES OF PERFORMANCE MANAGEMENT
1. Persistence
Implementing an effective Performance Management system requires continuous efforts and dedication. It's a long-term
process that demands sustained planning, execution, and refinement. Encouraging and maintaining employee engagement and
commitment throughout this process is essential for its success.
2. HR Leadership
Human Resource managers need to possess advanced business skills and stay updated with evolving technologies. They must
adapt to changes in the industry and be proficient in implementing new tools and methodologies associated with Performance
Management.
3. Melding Culture
Aligning Performance Management practices with the existing organizational culture is crucial for its successful implementation.
It involves merging new practices into the existing work environment, which can be deeply ingrained and resistant to change.
Adapting these practices to fit within the established culture while still driving improvements is a significant challenge.
4. Employee Participation
Active involvement and commitment from both managers and employees are critical for the effectiveness of Performance
Management. Creating an environment where employees feel motivated and engaged in the process of setting goals, receiving
feedback, and participating in continuous improvement initiatives is essential.
5. Complexibility
Performance Management involves assessing and developing both aptitude and attitude among HR professionals. It's a complex
process that requires a comprehensive understanding of human behavior, performance evaluation techniques, and strategic
planning to align individual goals with organizational objectives.

Q7. Explain process of Performance Management.
PROCESS OF PERFORMANCE MANAGEMENT
PERFORMANCE
PLANNING
PERFORMANCE
ANALYSIS
PERFORMANCE
APPRAISAL
PERFORMANCE
DEVELOPMENT
PERFORMANCE
MANAGEMENT
AUDIT

Phase 1: Performance Planning
This phase involves laying down strategic plans and yearly organizational goals, establishing employee performance plans
based on job descriptions, setting performance standards, and defining Key Result Areas (KRAs) and Key Performance Areas
(KPAs).
Phase 2: Performance Analysis
Continuous monitoring of employee performance, generating feedback, measuring results against set standards, identifying
causes for poor or good performance, and classifying identified factors into motivational and support aspects are key aspects
of this phase.
Phase 3: Performance Appraisal
This phase includes the evaluation of employee performance against set standards, maintaining performance records, striving
for improved productivity through goal setting, and providing an objective standard for compensation policies.
Phase 4: Performance Development
Focusing on maintaining individual performance standards, improving job-related competencies, and making employees
suitable for different positions within the organization are central to this phase.
Phase 5: Performance Management Audit
This phase involves assessing common principles and practices, formulating different techniques for performance appraisal,
aligning individual and team goals, linking performance to reward systems, and developing training and coaching systems in
line with Performance Management goals.

Q8. Define Performance Management System. Give functions of PMS.
A Performance Management System (PMS) refers to a structured approach or set of tools utilized by managers within an
organization to assess and evaluate employee productivity and the overall effectiveness of organizational operations. It serves
as a framework for communicating organizational goals, fostering personal accountability to achieve those objectives, and
monitoring and assessing individual as well as organizational performance outcomes.
FUNCTIONS OF PMS
1. Improving Time Management: PMS aids in optimizing time utilization by setting clear goals and objectives, enabling
employees to prioritize tasks effectively, thus improving overall time management within the organization.
2. Enhancing Employee Productivity: By providing a structured system for goal setting, feedback, and performance
evaluation, PMS encourages and enhances employee productivity, leading to improved individual and team performance.
3. Facilitating Organizational Growth: Effective Performance Management contributes to the growth and success of the
organization by aligning individual performance with organizational objectives, thereby driving overall progress and
development.
IMPROVING
PRODUCTIVITY
ORGANIZATIONAL
GROWTH
TIME
MANAGEMENT
FUNCTIONS
OF PMS

Q9. Define Strategic Planning. Explain the linkage of PM to Strategic Planning
STRATEGIC PLANNING
Strategic Planning is a systematic process focused on determining an organization's future goals and objectives. Its purpose is to
align the organization's products, services, and communications to achieve targeted profits and growth. It is rooted in the
organization's philosophy and culture, outlining strategies only after clear goals and objectives are defined.
LINKAGE OF PERFORMANCE MANAGEMENT (PM) TO STRATEGIC PLANNING
• Foundation for PM Activities: Strategic planning establishes the basis for all Performance Management activities by defining
strategic visions, goals, and objectives.
• Vision and Mission Alignment: A strategic plan typically includes Vision and Mission statements, guiding the organization's
goals. PM aligns employee performance goals with these overarching statements.
• Managerial Involvement: Greater involvement of managers in strategic planning ensures that formulated strategies are more
acceptable and can be effectively translated into PM practices.
• Alignment of Goals: It's crucial to ensure that departmental goals and strategies align with the organization's mission and
vision statements for effective Performance Management.
• Role Alignment: Job descriptions may be revised to ensure that individual roles within the organization correspond to and
meet the requirements of the organizational strategy.
• Effective PMS: For Performance Management to be effective, it must be based on the strategic plans of the organization. This
alignment ensures that Performance Management contributes directly to the achievement of strategic objectives.
• Improved Returns: When there's a clear linkage between performance and corporate objectives, organizations can expect
improved returns from their Performance Management System.

Q10. Give strategic purpose of PM.
The strategic purpose of Performance Management (PM) lies in its contribution to the achievement of an organization's long-
term goals, objectives, and overall success. Here are the strategic purposes of PM:
1. Goal Alignment:
PM aligns individual employee goals and performance with the overarching strategic goals and objectives of the organization.
This alignment ensures that each employee's efforts contribute directly to achieving the organization's strategic priorities.
2. Performance Improvement:
One of the primary strategic purposes of PM is to enhance individual and collective performance. By providing feedback,
coaching, and development opportunities, PM aims to improve the skills, capabilities, and productivity of employees, thereby
driving overall organizational performance.
3. Talent Management:
Strategically, PM plays a crucial role in identifying and nurturing talent within the organization. It helps in recognizing high-
performing employees, developing future leaders, and ensuring a pipeline of skilled individuals to support the organization's
long-term growth and sustainability.
4. Decision Making and Resource Allocation:
PM provides valuable data and insights through performance evaluations that assist in informed decision-making. It helps in
identifying areas needing improvement, allocating resources effectively, and making strategic decisions about workforce
planning and development.
5. Organizational Development:
Strategically, PM contributes to the overall development of the organization by fostering a culture of continuous improvement,
innovation, and learning. It encourages adaptability and responsiveness to changes in the business environment, ensuring the
organization remains competitive and relevant.

IMPORTANT DEFINITIONS IN THIS MODULE
1 PERFORMANCE MANAGEMENT
• Performance Management is a systematic process of managing and improving employee performance to achieve
organizational goals.
• Ronnie Malcom- PM is a systematic approach to managing a performance of individuals ensuring their personal
development and contribution towards organizational goals.
2 PERFORMANCE MANAGEMENT SYSTEM
• A Performance Management System refers to the tools and processes used to oversee, evaluate, and enhance employee
performance within an organization.
3 STARTEGIC PLANNING
• Strategic Planning involves a systematic process of setting organizational goals and defining strategies to achieve long-term
success.
• Hayes and Wheelwright - Strategic Planning is planning that is long-term, wide ranging and critical to organization success,
in terms of cost of resources it affects and the outcomes it envisions.
4 PERFORMANCE APPRAISAL
• Performance Appraisal is a formal assessment process that evaluates an individual's job performance against predetermined
objectives and standards.

Copyright © 2023 Jayanti Rajdevendra Pande.
All rights reserved.
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HR Paper 2 Module 1 INTRODUCTION TO PERFORMANCE MEASUREMENT .pdf

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