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Employee Performance Management and
Appraisals Demystified

Definition: Performance Management

PERFORMANCE MANAGEMENT is a system and process that links the organization's goals and strategies to individual and team performance so as to increase organizational effectiveness.

It is a joint process that involves both the line manager and the employee who identify common goals/objectives, which correlate with the higher goals of the organization. This process results in the establishment of written performance expectations; later used as measures for feedback and performance appraisal (the latter is also known as performance review, assessment or evaluation).

Performance Management is about providing direction, clarity and support to the work that employees do so as to optimize their effectiveness and efficiency in line with the needs of the organization. It focuses both on objectives/outcomes (the 'what') and on style and behaviors (the 'how'), so that it is possible to assess not only whether employees are achieving their set individual objectives, but also whether their performance is in line with the organization's preferred values and culture, e.g. teamwork, customer focus, interpersonal relationships, participative management style, etc. (doing the RIGHT THINGS in the RIGHT WAY).

The model below illustrates the four stages of Performance Management:

Performance Management Model

This model is aligned with the WORK NEEDS of individual employees, which are as follows:

Expanded Performance Management Model

To provide for the above needs of employees, let's consider what should happen at each stage of the Performance Management Cycle:

1. Planning Performance: Performance objectives for individual employees (at all levels) are jointly discussed and agreed during one-on-one, face-to-face meetings between jobholders and their immediate line managers - normally for a period of 12 months. (Similarly, objectives could be set for whole work teams, provided that the team members are totally interdependent, working towards achieving the same goal/output, i.e. each team member contributes a portion towards it).

2. Managing Performance: During this stage employees implement/execute their agreed objectives. They manage their own performance, assisted by their line managers who should remove performance obstacles from the work environment and provide the necessary resources, training and coaching. Line managers are also responsible for integrating and coordinating (horizontally and vertically) the objectives of all their employees/units/teams, monitoring and controlling their performance, taking corrective action, and doing joint problem solving as and when necessary. The leadership, feedback, reinforcement and support they need to provide them with throughout, are of utmost importance.

Managing Performance is an ongoing, 12 months' activity that actually runs through all the phases of the Performance Management Cycle. It is the golden thread of Performance Management.

3. Reviewing Performance: Times for formal Performance Reviews/Appraisals are decided by top management. Generally, 4- or 6-monthly formal performance appraisals are sufficient. During these sessions, employees and their direct line managers discuss (and assess) how well the agreed objectives have been achieved. Problem areas are identified and corrective actions planned, including possible training that the employee needs.

4. Rewarding Performance: The actual rating of performance (how well each objective had been achieved) forms part of the Performance Review session. Rewarding people for good performance can take the form of monetary rewards (performance-related pay such as bonuses and/or salary adjustments). However, the power of non-monetary rewards, such as praise and recognition, should not be ignored and needs to enjoy much more emphases than it generally does.

In practice, Planning Performance and Reviewing Performance can take place during one session, called the PERFORMANCE INTERVIEW.

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