3 PRM B

Purpose of performance management

Performance management is an instrument used by organisations to keep a check on employees’
productivity and their work. It helps the managers in monitoring and evaluating their performance
on jobs. The main objective of performance management is to build a culture where employees can
discharge their duties most efficiently and to the best of their abilities. It’s not as simple as it may
seem because it is quite difficult to express the purpose of performance management in few words.
In reality, the concept of performance management is multidimensional and much evolved. It is
always evolving and its purpose keeps on changing depending upon the nature of organisations and
its goals. Today, top management takes good care of its employees and if it wants the organisations
to thrive and run for a longer period, the management needs to keep adding new strategies to
improve the performance of the employees. This is to say that if performance management is done
properly, it brings a lot of business in the organisation and produce phenomenal results. Basically,
performance management process provides early access to managers to deal with performance
related issues. Employees who perform badly have adverse impact on the organisation as a whole
and therefore, no issue should be left unaddressed.

Components of performance management

a) Manager reviews: In manager reviews, employees are asked to analyse the performance of
managers. This is done so that managers can receive feedback from employees regarding their
abilities and skills which are required to guide a team efficiently.
b) Engagement surveys: These surveys help to get an insight to what is significant to the
employees of the organisation and to understand whether the employees are engaged in the
work they are doing.
c) Social recognition: Through social recognition, employees get an opportunity to build
meaningful relationships with one another. This provides empowerment to employees that they
are able to enjoy everyday accomplishments.
d) Alignment of goals: Departments are given their goals to accomplish, however, it is important
for the management to make them work for collective goals of the organisation. The goals of
employees should be aligned with the goals of the organisation.
e) Succession planning: This is an important part of performance because succession planning
assures that after the employees takes on new challenges in an organisation, the learnings
should pass on to the other employees. This ensures that all the employees are properly fit for
the organisation and understand the significance of team spirit and togetherness.

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 reviews (AC 1.2) (approx 200 words)
Performance management can be defined as a set of holistic processes via which the
organization involves its employees in the quest to maximize value creation and enhance
organizational effectiveness in the attainment of the organization’s mission and vision. The
components of performance management are:
·                     Setting Objectives and Performance Standards: An important component of
performance management is the setting of performance standards and objectives for individuals,
departments, and the organization. Such objectives can take varying forms such as specific targets,
time-bound ad hoc tasks, or even abiding standards to be fulfilled.
·                     Performance Reviews and Rating: A crucial component of performance
management are performance reviews which is a process aimed at assessing an employee’s
performance and its discussion with the employee, which helps motivate, and guide employees
better towards reaching their objectives. Performance reviews can be conducted through various
modalities such as one-on-one conversations between employees and managers, 360-degree
feedback, performance ratings, and many others.
·                     Learning and Development: Performance management often suffers the defect of
being short-sighted due to its heavy focus on an employee’s past performance. In order to improve
performance, however, an equally strong focus is required for future learning and development,
making the same an important component of performance management.
·                     Performance Related Pay (PRP): PRP refers to the linking of pay level to the
performance. Such an approach, albeit traditional, is in use in many organizations, making
performance management a crucial aspect of pay reviews in such organizations. 

Frequency, purpose and process of performance review

Usually organisations conduct performance reviews every six months. This varies from each
organisation for example companies which are new in the market i.e. start ups conduct these
reviews after every three months to see in which direction the company is heading and whether the
employees are able to understand the vision and both short and long term objectives of the
company.
The main purpose of performance review is to give feedback to the employees and managers about
their performance at work, to build healthy relationships at all levels, to maintain a clear and precise
record of performance, to build a proper line of communication between employees and employers
and to promote professional development.
Stages involved in performance review are- first is creating standard of performance that is
benchmarks are set for employees that they have to achieve while working, next is communication
of those benchmarks to the employees. If are not aware as to what is expected out of them, they will
not be able to accomplish the same. Third is determination of individual who will conduct the

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performance review, an individual who is well aware of the organisation must be picked for this
job, and last is measurement of actual performance with the standards set for the same.

Performance reviews refer to processes aimed at assessing an employee’s performance and

its discussion with the employee, which helps motivate, and guide employees better towards
reaching their objectives.
·               Process: The process of a performance review usually involves the
measurement or assessment of the employee’s performance against the agreed upon
targets and standards; providing feedback that involves information pertaining to their
individual performance, recommendations for the future, and the like; positive
reinforcement which compromises of affirming and appreciation of work well done, as
well as constructive criticism; exchanging views between both parties related to managing
performance; agreement between both parties on targets for the future, and procedure to
improve and sustain performance. 

Performance management and staff motivation

It is significant to have an extensive and detailed performance management plan which provides for
vision and facilitates competencies, however, also that encourages employees to accomplish a
worthwhile evaluation and puts up with feedback so that performance can be improved. A
performance management which doesn't give any positive or negative feedback doesn't serve any
purpose. When goals of organisation are communicated to the employees and they are made aware
about the performance reviews, the management must also motivate them using motivational
theories to accomplish the goals. This will help them to look forward to achieving their tasks and
gain rewards- monetary and non-monetary.
Motivational theories
F) Maslow’s hierarchy theory- This theory talks about needs of individuals- classifying the same
in five categories- basic needs, safety needs, belongingness, self-esteem and self realisation. All
individuals are not on same stage and desire different results when it comes to working in an
organisation. Some feel satisfied and motivated when they feel a sense of belongingness at a
place or for some, respect and self-esteem is top priority.
G) Herzberg’s two factory theory: This theory talks about satisfiers and dis-satisfiers. At job,
certain things like recognition, appraisals, increments, bonus, achievements, job
accomplishments etc. motivate employees. On the other hand, things like office politics, top

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 management approach, poor supervision, lack of team spirit, biased superiors etc. dissatisfy
employees.
H) McGregor’s theory: This theory categorises people into two theories that is X and Y. Theory
X takes up negative presumption about people. For example- Individuals do not have any
ambitions, they are coerced to work, totally controlled by superiors and do not have any
inherent liking for work. Theory Y presumes quite the opposite of X. Theory Y takes into
account individuals who have a will and desire to work and their outcome is dependent on the
incentives and rewards they are supposed to get for the work.
We will discuss a scenario of a school here. If teachers of a school are given with loads of
responsibility with no authority to take any decision and no power to delegate the work, they will
start feeling suffocated while working and their productivity will go down immensely. Therefore, it
is important for organisations to understand what motivates employees and introduce incentives
accordingly. It is very difficult to comprehend what motivates each employee, therefore, strategies
must be developed to know what triggers job satisfaction for them. The management must consider
that each employee is equally important.

Purpose of reward in performance management

The purpose of rewards in performance management is retention of staff meaning thereby
employees expect not just remuneration from the organisation but other allowances and rewards too
for their performance. Organisations that have generous reward system tend to rise at a faster pace
than those which lack the same. It helps in alignment of goals of employees and organisations. The
employees whose contribution is higher in job performance are rewarded with additional benefits
which motivates them to work harder and whole heartedly. Rewarding employees aim at making
employees feel an integral part of the organisation so that their output is increased and they are
highly productive.
However, what should be kept in mind is employees must be rewarded fairly and without any kind
of ambiguity. There should not be any biases and rewards should be given entirely on the basis of
performance. There must not be any inclination to any other factor and the foundation of the same
purely should be their work and productivity. Rewards can be different depending upon what
motivates employees. It can be verbal appreciation, bonus, increments, recognition, promotions, etc.
When employees are rewarded immediately after they accomplish the tasks, it has been observed
that their attitude towards work improves phenomenally and they become more positive when it
comes to meeting deadlines and submitting work.

Components of effective total reward system

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Following are the components:
I) Compensation: Base salary of the employee is included in this. But compensation includes
other things also like long and short term incentive pay. Employees who have the ability to go
beyond expectations are motivated by these rewards and perform exceptionally in whatever
they do.
J) Recognition: Employees must always work with this feeling that their work is appreciated at all
levels and their main aim must be to facilitate the management to achieve the long term
objectives of the organisation.
K) Benefits: Apart from compensation, employees must be provided with additional benefits like
paid leaves for sickness, bereavement or vacation. Time off has become very imperative these
days to rejuvenate minds and improve productivity. Other things which are included in this are
medical benefits, social security and job security. Organisations who offer a complete package
of benefits apart from salary have uniqueness over rival companies.
L) Work life balance: In U.S, 28 percent of employees live with this feeling that they are
overworking and are unable to maintain a work life balance. For mental peace and stress free
life, it is more than important to create proper work life balance and it is not just the duty of
employees but also of the management. During off days, employers must refrain from calling
the employees for work. Employers are required to be flexible with employees who have
irregular schedules due to family problems.
M) Development: During their tenure, employees keep on developing their skills and talents and if
at any point of time they feel that nothing more is left to learn out of this job, they tend to leave.
Therefore, it is the duty of employers to provide employees with new things to learn. Lack of
development opportunities is the most common reason for the employees to quit their jobs.

Factors to be considered while managing performance

N) Strong work ethics: There is no doubt in the fact that to rise up in any field skills, expertise and
knowledge is required. To achieve highest success, an individual has to face many hurdles
including situational and social-economic constraints. However, to overcome the same certain
things are needed- hard work, consistency and sustenance.
O) Commitment to work: Employers must provide employees with meaningful and achievable
targets. Such kind of goals facilitates maximisation of individual’s intelligence and commitment
towards work. It has been observed that employees who do not find their jobs meaningful tend
to be less productive and dissatisfied with the work.

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P) Leverage strength: The mindset, values, expertise, personality traits, intelligence, hard work
and consistency- all together constitute strengths of an individual. Strengths of an individual
make him different from others. Employers must leverage the strengths of employees and help
them excel. They must be given tasks that challenge them and ensure their growth.
Q) Building of strong relationship: Establishing good relationships with employers and among
employees is a very important social skill and must be improvised for maintaining a skilful
workforce. The work environment in organisations has been drastically changed how
employees should perform.
R) ·         Capability: Capability refers to the ability of the employee to provide the work expected of
them to the required standard. While managing performance it is essential for the manager to
determine the capability level of the employee for a particular task, or job, and provide them with
objectives and targets that are suited to their capability level.
S)

T)  
U) ·         Good Performance: Good performance can be defined as the fulfillment or overachievement
of expected performance standards. This is a crucial factor to consider during performance
management by the managers to make sure employees with good performance are being given
tasks that help them grow further, challenge them to do better, and sustain their performance level.
V) ·         Bad Performance: Bad performance can be defined as the failure to provide work that is
expected of the employees or the inability to meet the standards expected of them. In performance
management, a manager needs to note contentious poor performance on the part of the employee
and schedule a meeting with them to discuss the same. 

Data required by individuals who are involved in performance management process

W) Analysing turnovers using performance level: If the employees who are performing up to the
mark leave organisation frequently than those whose performance is below standards is a sign
of weak workforce. This also leads to meaningful conversations around what is the meaning of
high performance and what determinants are important for indulging high-performing talent.
X) Strengths and needs of workforce: What kind of mission and development goals are required
are evaluated here so that the workforce can be strengthened. The organisational goals must be
in alignment with the strengths and overall needs of the employees. The strengths and
weaknesses of workforce defines the goals.
Y) Managerial effectiveness: Performance management process requires date that explains how
efficiently top management is involving the employees when it comes to clarification of
responsibilities, setting of expectations, development of plans and addressing of concerns

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 related to low performance. It helps in giving a route to evaluate whether managers are
performing the right tasks.
Z) Identification of talent: Data that provides for capabilities of employees, their expertise and
skills is utilised to pick employees who can be given with jobs holding high responsibility and
timely accountability.
AA) Staff effectiveness: The efficiency and quality of individuals hired by the organisation is
required by agents performing performance management.The higher the amount of data used by
companies for performance management process , the better the quality of process will be. If
the data in the organisation is clear, organised and full of quality, more and more individuals
would like to use it. This leads to staff effectiveness because all the data related to employees is
recorded in one system and it can be accessed whenever the need arises in the organisation. It is
important for all organisations to keep comprehensive database of all the individuals for
improving staff effectiveness.
BB) A range of data is required by individuals who are involved in the performance management
process, such as data relating to the strengths and needs of the workforce such as what kind of
mission and development goals are required so that the workforce can be strengthened, data
pertaining to managerial effectiveness relating to how efficiently top management is involving the
employees when it comes to clarification of responsibilities, setting of expectations, development of
plans and addressing of concerns related to low performance, staff effectiveness and much more.
CC)Extremely significant to the performance management process is the data requirement pertaining
to benchmarking, which relates to analyzing the performance metrics of the organization in relation
and comparison to similar organizations. Such data is crucial for efficient performance
management since it helps to understand an organization’s performance metrics in relation to other
organizations and understand where, if any, places the organization is lacking to be up with the
completion.  In this context data relating to turnovers are also important. Such as If the employees
who are performing up to the mark leave organization frequently then those whose performance is
below standards are a sign of a weak workforce. This also leads to meaningful conversations
around what is the meaning of high performance and what determinants are important for indulging
high-performing talent.
DD)In the context of data requirements for performance management, data protection legislation is also
of crucial importance. Data protection legislation is laws that protect individuals from misuse of their
personal information. Given that HR personnel collects a range of sensitive and personal data of
employees such as health records, criminal records (if any), and other personal and sensitive
information, which are crucial for performance management. It is important for the manager and the
organization to display a strong commitment to data protection, by enlisting consent before utilizing
and storing data, making the employee aware of what data is being collected and for what reason,
and the like, so that an atmosphere of trust is created enabling proper management of
performance.

Personal experience
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During the assignment, I learnt that an organisation may be small or big with two employees or
thousand, however, each organisation must perform performance management for improving
efficiency of employees and for taking the business to unimaginable heights.
During the assignment, I learned that an organization may be small or big with two employees or a
thousand, however, each organization must perform performance management for improving the
efficiency of employees and for taking the business to unimaginable heights. Managing the employee’s
performance as has been made clear to me over the course of the assignment is crucial to reaching the
organization’s targets and objectives since it provides employees with guidance to understand what is
working in regard to their performance and what is not, where they are falling short, and the like. It also
helps in their personal development by motivating them through positive reinforcement which is a
crucial component of performance management.

References
1. S. Hearn (2019). What Is the Purpose of Performance Management?.
https://www.clearreview.com/what-is-purpose-of-performance-management/
2. R. Badubi (2017). Theories of Motivation and Their Application in Organizations: A Risk
Analysis. https://researchleap.com/theories-motivation-application-organizations-risk-analysis/
3. N. A. (2021). Motivation and Performance Management System.
https://www.completecontroller.com/motivation-and-performance-management-system/
#:~:text=The%20more%20motivated%20an%20employee,by%20the%20feedback%20from
%20managers.
4. C. Contributor (2020). What Are the Components of a Comprehensive Total Rewards &
Motivation System?. https://smallbusiness.chron.com/components-comprehensive-total-
rewards-motivation-system-36942.html
5. E. Dirks (2020). What Are the Components of a Total Rewards System?.
https://hrsoft.com/what-are-the-components-of-a-total-rewards/
6. Joseph (2019). Reward systems and its components of Reward systems.
https://logicplesi.blogspot.com/2019/08/reward-systems-and-its-components-of.html