FOUNDATIONS OF PERFORMANCE MANAGEMENT

1. Linking HR to Business Strategy

2. Performance appraisal vs. performance management 3. Definition & Conceptual understanding

4. Performance management & psychological contract

5. Management process linkage to performance management 6. Pre conditions

7. Performance management cycle

8. Performance management sequence

1. Competitive Advantage

a) Competitive advantage is at the heart of an organizations performance in competitive markets low costs, differentiation or a focus strategy (Michael Porter, 1980).
b) Value that an organization creates for its buyers that exceeds its costs of creating it; key lies in knowing what customers want. Eg: Google trying to beat Facebook; twitter; scribd.

2. Resource Based View

a) Continuously creating new resources and capabilities and developing existing ones that are superior to its competitors, in response to rapidly changing market conditions. b) Resources physical, human and financial assets. Eg: BMW

LINKING HR TO BUSINESS STRATEGY

1. Competitive priorities differ in terms of cost, quality, delivery dependability, delivery speed, flexibility and innovation. 2. Linking HR with low cost business strategy 3. Linking HR with Differential business strategy

Performance Appraisal To Performance Management

From
System Appraisal Outputs Reward oriented Ratings common Top down Process Joint Review Outputs / Inputs Development oriented Less rating 360 degree feedback

To

Directive
Owned by HR professionals

Supportive
Owned by users

UNDERSTANDING PERFORMANCE MANAGEMENT

Five issues must be considered: Meaning of performance Significance of values Meaning of alignment

Managing expectations
Significance of discretionary behaviour

Meaning of Performance
Performance should be defined as the outcomes of work because they provide the strongest linkage to the strategic goals of the organization, customer satisfaction, and economic contributions.

Performance is behaviour and should be distinguished from the outcomes because they can be contaminated by systems factors.

Meaning of Performance
Performance means both behaviours and results. What is done? How it is done?

Significance of values
1. Upholding the values of an organization 2. The focus is on what people do to realize core values. Eg: Sandoz

Meaning of alignment

Managing Expectations
Shared understanding of what is required to improve performance and how this will be achieved.

Significance of Discretionary Behaviour

Discretionary behaviour refers to the choices that people make about how they carry out their work and the amount of effort, care, innovation and productive behaviour they display. Eg: Profit sharing plans

Definition
Performance management is a strategic and integrated approach to delivering sustained success to organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors. PMS is a key HR strategy to gain competitive advantage Strategic: systematic and holistic approach Continuous & Integrated approach Integration: vertical, functional, human resource and goal integration

Performance Management & Psychological Contract

Psychological Contract is concerned with assumptions, expectations, promises and mutual obligations. Helps to clarify the psychological contract by: Joint agreement and definition of roles. Communicating expectations in the form of targets, standards of performance, behavioural requirements (competencies) and upholding core values. Obtaining agreement on the contribution of both parties Defining level of support Providing rewards that reinforce messages Opportunities to clarify points

Performance Management Process

Management Process Linkage to Performance Management

BUSINESS STRATEGY

Process of discovering, defining and implementing business activities that will result in value.

BUSINESS PROCESSES Collection of linked business activities that enable to deliver goods, services, information or money.

PERFORMANCE MANAGEMENT SYSTEM

SHAREHOLDER VALUE PROPOSITION Description of the give and get relationship between the organization and each of its stakeholders, relative to alternatives.

Process to monitor business activities & facilitate achievement of the mission and objectives of the organization.

PRECONDITIONS
a) Well designed jobs b) Written job descriptions c) Comprehensive orientation d) Effective training

e) Effective supervision
f) Positive work environment: linking goals, collaboration, on going process, forward looking, two way communication

PERFORMANCE MANAGEMENT CYCLE / PROCESS

15

PERFORMANCE MANAGEMENT SEQUENCE

STAGES OF PERFORMANCE MANAGEMENT

FOUNDATIONS OF PERFORMANCE MANAGEMENT

1. Linking HR to Business Strategy
2. Performance appraisal vs. performance management 3. Definition & Conceptual understanding

4. Performance management & psychological contract

5. Management process linkage to performance management 6. Pre conditions

7. Performance management cycle

8. Performance management sequence