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Published by odllab, 2019-12-20 04:38:50

BMG314/03 Performance Management

COURSE MODULE
PERFORMANCE
MANAgEMENT
Course Code: BMG314/03
Course adapted by: Mr. Lim Chin Ewe & Assoc. Prof. Balakrishnan Muniapan School of Business and Administration (SBA)


PROJECT ADVISOR
Professor Dr Zoraini Wati Abas
COURSE MODULE DEVELOPMENT TEAM
Content Adapters: Balakrishnan Muniapan & Lim Chin Ewe
Lead Instructional and Visual Designer: Fauziyah Md Aris Instructional and Visual Designers: Norliza Mhd Rodzi and Nurain Mohd Hassan Language Editor: Meilina Puteh
Margin Setting: Nurain Mohd Hassan
Cover Page and Content Design: Nurain Mohd Hassan
COURSE COORDINATOR
Associate Professor Balakrishnan Muniapan
DESIGNED AND DEVELOPED BY
Online Digital Learning Lab (ODL Lab)
PRODUCED BY
Instructional Design for Engaging Experiences (IDeX) Wawasan Open University
Acknowledgement: This course module has been adapted by the
School of Business and Administration (SBA) from the Online Course Materials for the
Performance and Compensation Management Unit 1 & Unit 2 (BMG310/05) developed by Wawasan Open University.
First edition, December 2019
This course material was published to support the learning of students registered with Wawasan Open University. Wawasan Open University does not grant any degree, certification or credits based solely on your completion of this course material.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise,
without prior written permission from Wawasan Open University.
© 2019 Wawasan Open University
Wawasan Open University is Malaysia’s first private not-for-profit tertiary institution dedicated to adult learners.


01
02
03
04 05
TABLE OF CONTENTS Part 1 | About the Course
Part 2 | Course Overview
Course Synopsis
Course Contents
Course Learning Outcomes
Study Schedule Assessment Methods
Part 3 | Course Study Guide
Unit 1 Unit 2 Unit 3 Unit 4 Unit 5
Theoretical foundations of performance management system Fundamentals of an ideal performance management Performance appraisal: An overview
Performance appraisal processes and its problems Characteristics of an effective performance and its challenges
Part 4 | References
Part 5 | Feedback Form


PART 1 ABOUT THE COURSE
COURSE DETAILS
School
Course Type
Credit Hours
Learning Hours : 120 hours
: School of Business Administration (SBA) : Specialisation
: 3 hours
Course Title : Performance Management Course Code : BMG314/03
Course Coordinator : Associate Professor Balakrishnan Muniapan Email : [email protected]
Core Reading Materials : BMG310/05 Performance and Compensation Management
ALLOCATION OF STUDENT LEARNING TIME
No
Activities
No. of Hours
60
10 10
30 8 2
1
2 Attending 5 Tutorial Classes (2 hours per class)
3 Participation in Online Forum Discussions
4 Completing the Course Assignments (CA1 & CA2)
5 Exam Revision
6 Examination BUY NOW
Study Learning Materials, Learning Activities and Self- Tests
BMG314/03 Performance Management
1
Total
120


PART 2 COURSE OVERVIEW
COURSE SYNOPSIS
BMG 314/03 Performance Management is a core major 3-credit, higher level course within the Bachelor of Business (Hons) in Human Resource Management programme. Performance management is one of several important human resource management activities and an effective tools used by organisations to successfully execute their strategies through their employees’ performance. This course is an introduction to the development of organisational performance management systems and performance appraisal within the context of Malaysia. It highlights the approaches of how organisations design their performance management systems to enhance their human resource management effectiveness such as human resource planning, recruitment, selection, reward, retention, motivation and subsequently contributes to the overall organisational performance and employee wellbeing.
COURSE CONTENT
The course is divided into five (5) units and the topics are as given below:
1. Theoretical foundations of performance management system 2. Fundamentals of an ideal performance management
3. Performance appraisal: An overview
4. Performance appraisal process and its problems
5. Characteristics of an effective performance management system and its challenges
BMG314/03 Performance Management 2


COURSE LEARNING OUTCOMES (CLOS)
By the end of this course, you should be able to:
1. Discuss the importance of performance management appraisal and its impact on people and organisational management.
2. Describe the development of Performance Management System (PMS), and its processes, and performance management appraisal aligned with organisational goals.
3. Explain the role played by human resource professionals to design effective PMS and appraisal, challenges and strategies to overcome the challenges.
BMG314/03 Performance Management 3


4
Unit
1
2
3
5
Tutorial
1
4
2
3
5
STUDY SCHEDULE
(Weekly topic and study activity for each unit)
Topic
Performance management and performance management systems
Fundamentals of an ideal performance management
Overview of performance appraisal
Performance appraisal processes and its problems
Effective performance management system and challenges
Focus
Definition of performance management, and performance management systems in organisations
Basic components of a performance management system from goal setting to performance management
Aligning the performance management system with performance appraisal practices in organisations
Understanding the processes of performance appraisal and identifying the problems associated with the performance management system
Knowing what is an effective PMS and the organisational challenges in developing it
Learning Activities/ Self-Assessment
Self-reflective exercises, self-check and video and exploring the world of performance management
Self-reflective exercise, self-check and video and practical demonstration on how to develop a PMS
Self-reflective exercise, self-check and video and practical demonstration on how to develop a performance appraisal system aligned with PMS
Self-reflective exercises, self-check and video and in class case studies on performance appraisal problems
Self-reflective exercises, self-check and video and in class case studies on challenges of performance management
BMG314/03 Performance Management 4


ASSESSMENT METHODS
COURSE
ASSIGNMENT 1
(CA1)
COURSE
(CA2)
Quiz, Group Work, Presentation, Proposal, Essay, Annotated Bibliography, etc.
Quiz, Group Work, Presentation, Proposal, Essay, Annotated Bibliography, etc.
The student will be assessed through the following methods:
ASSIGNMENT
TOTAL 100%
FINAL EXAM
BMG314/03 Performance Management 5


PART 3
LIST OF CONTENTS
U1 : THEORETICAL FOUNDATIONS OF PERFORMANCE MANAGEMENT SYSTEM
1.1 Introduction to performance management
1.2 Various definitions of performance management 1.3 Importance of performance management in HRM
U2 : FUNDAMENTALS OF AN IDEAL PERFORMANCE MANAGEMENT SYSTEM
2.1 The objectives of a performance management system 2.2 Performance management process
2.3 Stakeholders and successful performance management 2.4 Performance management best practices
U3 : PERFORMANCE APPRAISAL: AN OVERVIEW
3.1 Key elements of performance appraisal 3.2 Approaches to performance appraisal 3.3 Who would be the raters or appraiser? 3.4 Rating in performance appraisal
U4 : PERFORMANCE APPRAISAL PROCESSES AND PROBLEMS
4.1 Steps in conducting performance appraisal
4.2 Guidelines for effective performance appraisals 4.3 Avoiding performance appraisal process problems 4.4 Concerns and issues with performance appraisal
U5 : CHARACTERISTICS OF AN EFFECTIVE PERFORMANCE APPRAISALS AND CHALLENGES
5.1 Characteristics of effective performance appraisal 5.2 Challenges of performance appraisal
5.3 Future of performance appraisal
BMG314/03 Performance Management 6


COURSE MODULE
Unit 1
THEORETICAL FOUNDATIONS OF PERFORMANCE MANAGEMENT SYSTEM


U1
UNIT STRUCTURE
1.1
1.2
1.3
1.4 1.5
Introduction to Performance Management
Learning Activity 1.1 Self-Check 1.1
Various Definitions of Performance Management
Learning Activity 1.2 Self-Check 1.2
Importance of Performance Management in HRM
Learning Activity 1.3 Self-Check 1.3
Summary
References
BMG314/03 Performance Management 8
THEORETICAL FOUNDATIONS OF PERFORMANCE MANAGEMENT SYSTEM


U1
INTRODUCTION
Source: https://youtu.be/KWMty-_UzKU What is performance management?
A literature search on the term “performance management” would yield topics like performance appraisal, goal setting, methods of rating, company strategies, alignment of objectives and many other similar concepts. So what exactly is performance management?
Performance management is a relevant concept in today’s organisations. Performance management is simply a process that provides feedback, accountability, and documentation for performance outcomes. It helps employees to channel their talents toward organisational goals. It is seen broadly as a tool to manage performance in any organisation to achieve common goals. A company can harness the performance of its employees in order to sustain the organisation strategically. This concept is also known as strategic performance management system which focuses on the strategic element and the need to integrate performance management to other functional areas of business.
Unit 1 provides a condensed version of the characteristics, underlying theories and integration of the concept of performance management with other HR practices.
INTRODUCTION TO ORGANISATION
BMG314/03 Performance Management 9
Please watch this video to understand more about performance management.
Duration : 2.00 minutes


The purpose of this Unit is to trace the relevant literature on performance management in the general context which is very much a Western management model. This Unit explores the beginning, evolution and the rationale of the concept of performance management in order to understand its relevance today. We will observe how the concept was viewed some 200 years ago and review the major theories of motivation that provide some insights into how the concept works.
UNIT LEARNING OUTCOMES
By the end of this Unit 1, you should be able to:
1. Explain the background of performance management system.
2. Discuss the theoretical principles underlying the concept of performance management.
3. Differentiate between performance appraisal and performance management.
1.1 WHAT IS PERFORMANCE MANAGEMENT?
Performance management is the system through which organisations set work goals, determine performance standards, assign and evaluate work, provide performance feedback, determine training and development needs and distribute rewards.
The two key elements in performance management are:
1. Continuous process. It is a never ending process of setting goals, monitoring performance, coaching and feedback.
2. Alignment with strategic goals. Managers have to ensure that employees’ activities are in line with organisational goals.
BMG314/03 Performance Management 10


Strategies for performance management exist to develop a high-performance culture and achieve increased organisational effectiveness, better results for individuals and teams, and higher levels of skill, competence, commitment and motivation. Performance management is a continuous responsibility for managers and team leaders. It is not a once-a-year getting to know you better event. It can only happen when there is an ongoing process to manage performance. At the end of the process, individual employees must be convinced they want to excel in performing their respective tasks. Managers/supervisors need to play a supportive role to motivate employees to strive for excellence.
Performance management has to be differentiated from performance appraisal. While performance management is the process of identifying, measuring, managing, and developing the performance of the human resources in an organisation, performance appraisal, on the other hand, is the ongoing process of evaluating employee performance. There are many ways to differentiate the two. Performance management is about what is to be done to assist an employee in their development to become increasingly better in their performance for the organisation. Performance appraisal is how to evaluate the progress being made by assessing or measuring the employee’s actual performance on a regular basis over time.
Another way to differentiate the two is that performance appraisal deals with the past, meaning how the employee has performed in the immediate past period being reviewed during the appraisal process. Performance management, however, is focused on the present and the future. Performance appraisal is the once-a-year feedback on the employee’s strengths and weaknesses without the ongoing coaching process. It is a component of the performance management system. Performance management today has evolved from performance appraisal.
As the saying goes, behind a successful enterprise, there is always a competent leader supported by his/her followers. For continuous success, a leader has to ensure that his/her employees perform to their fullest potential. Whether the enterprise is big or small, managing performance is an enduring presence if the enterprise is to survive the change of time.
BMG314/03 Performance Management 11


Learning Activity 1.1
Source: https://youtu.be/XtoznQQ3NO0
Is the company you are working with, practising performance appraisal or performance management? How do you feel being appraised, or when appraising your subordinates?
Self-Check 1.1
Performance management is a broad area that includes performance appraisal. Remember that performance appraisal is just a part of the performance management.
Suggested answers to activity
Activity 1.1
This is an open ended question. Answer varies according to the companies. Some large multinationals may have comprehensive performance management systems; other small companies may just survive on performance appraisal. The concept of performance management is a product of western culture. From the Asian cultural perspective, performance appraisal is something employees do out of duty.
BMG314/03 Performance Management 12
Please watch this video to understand more about the differences between Performance Appraisal vs. Performance Management. Duration : 3.26 minutes


1.2 VARIOUS DEFINATIONS OF PERFORMANCE MANAGEMENT
Performance management can be defined as a process which continuously identifies, measures and develops the performance of the workforce in the organisation. And to do so, each individual’s performance and objectives are connected with the overall mission and goals of the organisation.
Performance management is also a process of ensuring that the set of activities and output meets an organisation's goals in an effective and efficient manner. Performance management can focus on the performance of an organisation, a department, an employee, or the processes in place to manage particular tasks.
Performance management standards are generally organised and disseminated by senior leadership in an organisation and by task owners. It can include specifying tasks and outcomes of a job, providing timely feedback and coaching, comparing employee's actual performance and behaviors with desired performance and behaviors, and instituting rewards.
Performance management for business is defined as a strategic and integrated approach to increase the effectiveness of companies by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.
Performance management principles are used most often in the workplace and can be applied wherever people interact with their environments to produce the desired effects. Examples can be seen in schools, community meetings, sports teams, health settings, governmental agencies, social events, and even political settings.
Managers use performance management to align company goals with the goals of teams and employees in an effort to increase efficiency, productivity, and profitability. Performance management guidelines stipulate clearly the activities and outcomes by which employees and teams are evaluated during performance appraisal.
Learning Activity 1.2
In your own words and based on your organisational experience, write a definition of performance management.
BMG314/03 Performance Management 13


Self-Check 1.2
Know what performance management all about - performance management is a process of ensuring that set of activities and outputs meets an organisation's goals in an effective and efficient manner. Performance management can focus on the performance of an organisation, a department, an employee, or the processes in place to manage particular tasks.
Answer to Learning Activity 1.2
This is an open ended question. Answer varies according to individuals. It could be as an approach to increase the effectiveness of people in organisation by improving the performance of the people at work or other definition based on your previous organisational experiences.
1.3 IMPORTANCE OF PERFORMANCE MANAGEMENT
In the late 1980s, performance management was recognised as an integrated, holistic approach to managing performance on a continuous basis. It pervaded the entire business and gave purpose and meaning to those involved in achieving organisational success. Managing performance and aligning their objectives facilitated the effective delivery of strategic and operational goals. Several research studies indicated that there was a clear and immediate correlation between using performance management programmes and improved business and organisational results.
In the public sector in many developing countries like Malaysia, the effects of performance management systems have differed from positive to negative, suggesting that differences in the characteristics of performance management systems and the contexts into which they are implemented play an important role in the success or failure of performance management.
A performance management process sets the platform for rewarding excellence by aligning individual employee accomplishments with the organisation’s mission and objectives and making the employee and the organisation understand the importance of a specific job in realizing outcomes.
Ultimately, every performance management system should ensure the achievement of overall organisational goals and ambitions while aligning them with employee goals. In this way, performance management and business objectives are aligned with employee wellness and morale.
Learning Activity 1.3
Describe some of the benefits of performance management within the context of your organisation or an organisation of your choice.
BMG314/03 Performance Management 14


Self-Check 1.3
The performance management process combines information gathering through monitoring goal completion, feedback and discussions. By analysing successes, strengths, learning from mistakes and examining potential for growth and development, businesses can develop talent, enhance individual performance and weed out problems.
Answer to Learning Activity 1.3
Benefits of performance management may include direct financial gain, growth of sales, reduce costs in the organisation, aligns the organisation directly behind the CEO's goals. It decreases the time it takes to create strategic or operational changes by communicating the changes through a new set of goals. It motivates the workforce, improves employee engagement because they understand how they are directly contributing to the organisations high level goals towards improved management control by providing well documented communication processes.
Source: https://youtu.be/fV5y2MkoFcA
BMG314/03 Performance Management 15
Please watch this video to learn about the seven benefits of performance management.
Duration : 1.16 minutes


1.4 SUMMARY
Now that you have completed Unit 1 you should be able to:
1. Explain the background of performance management.
2. Discuss the theoretical principles underlying the concept of performance management.
3. Differentiate between performance appraisal and performance management.
4. Distinguish the stages of the development of performance management and the corresponding supporting theories.
1.5 REFERENCES
Aguinis, H. (2019). Performance management (4th ed.). Chicago, IL: Chicago Business Press.
Bougher, Jamie. (2016, 8 Jan). Performance appraisal vs. performance management [Video file]. Retrieved from https://www.youtube.com/watch?v=XtoznQQ3NO0&feature=youtu.be
iRevü. (2017, 1 Sep). 7 Fascinating benefits of performance management [Video file]. Retrieved from https://www.youtube.com/watch?v=fV5y2MkoFcA
Wawasan Open University. (Year?). BMG310.05 Performance and Compensation Management Course Material Unit 1.Penang, Malaysia.
BMG314/03 Performance Management 16


http://www.wou.edu.my/


COURSE MODULE
Unit 2
FUNDAMENTALS OF AN IDEAL PERFORMANCE MANAGEMENT


U2
UNIT STRUCTURE
2.1
2.2
2.3
2.4
2.5 2.6
The Objectives of a Performance Management System
Learning Activity 2.1 Self-Check 2.1
Performance Management Processes
Learning Activity 2.2 Self-Check 2.2
Stakeholders and Successful Performance Management
Learning Activity 2.3 Self-Check 2.3
Performance Management Best Practices
Learning Activity 2.4 Self-Check 2.4
Summary
References
BMG314/03 Performance Management 19
FUNDAMENTALS OF AN IDEAL PERFORMANCE MANAGEMENT


U2
INTRODUCTION
FUNDAMENTALS OF AN IDEAL PERFORMANCE MANAGEMENT
Source: https://youtu.be/SyOZ_4rWWiY What is an ideal performance management system?
Is there an ideal performance management model suitable for any kind of organisation?
Yes, there are a few common characteristics of performance management suitable to organisations of any industry. These common features significantly improve the quality of the performance management process in any organisation and industry.
A performance management system includes various important HR functions like performance goal-setting, performance feedback, monitoring, rewards and performance review and appraisal.
An effective performance management system helps HR managers establish clear performance expectations through which employees can easily understand what is expected of their job. It allows managers to reinforce individual accountability to meet their goals and evaluate their own performance for employees.
BMG314/03 Performance Management 20
Please watch this video to understand more about the HR basics in Performance Management.
Duration : 8.37 minutes


There are many versions of the performance management process. While the stages or phases in the performance management process may differ from organisations to organisations, the essence is similar and the process is iterative.
In this Unit, you will be introduced to various models of performance management processes with an universal application.
UNIT LEARNING OUTCOMES
By the end of this Unit 2, you should be able to:
1. Describe the activities involved in the performance management process.
2. Discuss the purpose of performance management system.
3. Identify the characteristics of a SMART goal.
4. Discuss the key best practices for performance management
BMG314/03 Performance Management 21


2.1 THE PURPOSE OF A PERFORMANCE MANAGEMENT SYSTEM
Source: https://youtu.be/Yjw-KHou3AY
Performance management aims at developing individuals with the required commitment and competencies for working towards the shared meaningful objectives within an organisational framework.
Performance management frameworks are designed with the objective of improving both individual and organisational performance by identifying performance requirements, providing regular feedback and assisting the employees in their career development.
The information collected for performance management is used for salary adjustment, determine year-end bonus, closing the gap of performance expectation etc. The following paragraphs summarise the purposes of a performance management system.
Strategic purpose
An organisation should have a clear strategic purpose. All organisational initiatives have to be in line with this purpose. Any activity by any employee which is not in line with this strategic direction may be considered “frivolous” or “wasteful”. Thus the individual’s job profile and its job objectives must be intentionally contribute to the final outcomes of the organisation. This is its strategic purpose.
1
BMG314/03 Performance Management 22
Please watch this video to understand more about the purposes of a performance management system.
Duration : 2.30 minutes


2
Onboarding process
For a new employee who is an outsider, performance management serves as a means to expedite the onboarding process for him/her to become an insider.
Administrative purpose
Traditionally the information collected from performance appraisal sessions has been the basis for various human resource decisions. This focus has not changed. In fact, it has been enlarged to take in more future-oriented and strategic aspects. Decisions like promotions, salary, merit pay, dismissal, special rewards, improvement plans are made based on this useful source of information. Beyond the usual remuneration-related decisions, a big part is intended for purposes of talent management and even succession planning which are vital for the sustenance of organisational leadership. In a litigating environment, such information can be vital to legally defend the decisions and position the organisation has taken.
Informational purpose
There has to be a clear line of communication between the superior and subordinate. Two-way communication is needed for the supervisor to inform the progress achieved, make expectations known, clarify on doubts and barriers on performance, emphasise on the priorities and to coach on areas for improvement. The subordinate should be allowed to express his/her viewpoints, clarify on areas he/she is unsure of, make representations where assistance is needed, provide inputs on, and request for development. In short, it is a time to have very clear lines of communication to arrive at a common understanding to move on to the contractual phase.
Development purpose
Development is an area which differentiates performance management from other processes. It is a session to agree on what the strengths and weaknesses of the individual are so that both the supervisor and subordinate understand their respective roles to enable the subordinate to achieve his/her full potential. The intended purpose is for an employee to make continuous improvement towards the targets set.
3
4
5
BMG314/03 Performance Management 23


Organisational maintenance purpose
Organisations often find that there is a need for a database or an inventory of the organisation talent pool. Organisational development would require this information which really is an accumulation of individual complete personal profiles. In mapping both organisational and individual development needs as well as conducting organisation development and assessing organisation initiatives, such information are revealing and vital for the organisation’s growth.
Documentation purpose
Documentation purpose.The last purpose can be termed as a validation tool. It can be used to validate human resource instruments with the information collected through the performance management system. In other words, conclusions drawn using human resource tools can be correlated with the results collected through performance management for more effective decisions to be made.
Learning Activity 2.1
The strategic purpose of a performance management system is a critical success factor of an organisation. Do you agree? Give reasons for your answer.
6
7
BMG314/03 Performance Management 24


Self-Check 2.1
Every organisation should have a clear strategic purpose or direction with all the organisational initiatives have to be in line with this purpose, and the same applies to performance management as well.
The main goal of performance management is to ensure that the organisation as a system and its subsystems work together in an integrated fashion for accomplishing optimum results or outcomes.
Answer to Learning Activity 2.1
Performance management aims at building a high performance culture for both the individuals and the teams so that they jointly take the responsibility of improving the business processes on a continuous basis and at the same time raise the competence bar by upgrading their own skills within a leadership framework.
Its focus is on enabling goal clarity for making people do the right things in the right time. It may be said that the main objective of a performance management system is to achieve the capacity of the employees to the full potential in favor of both the employee and the organisation, by defining the expectations in terms of roles, responsibilities and accountabilities, required competencies and the expected behaviors.
BMG314/03 Performance Management 25


2.2 PERFORMANCE MANAGEMENT PROCESS
Performance management process is a systematic process of managing and monitoring the employee’s performance against their key performance parameters or goals. It is regarded as a process for driving the individual and organisational performance management.
An effective performance management process focuses on aligning your workforce, building competencies, improving employee performance and development, and driving better business results.
There are many versions of the performance management process. While the stages or phases in the performance management process may differ, the essence is similar and the process is iterative.
There is no right or wrong answer in the number of stages involved in a performance management system. Basically there are six (6) common stages of performance management process as depicted in Figure 1.1.
Pre-requisites
Performance Renewal & Re-contracting
Performance Planning
Performance Review
Performance Execution
Performance Assessment
Figure1.1. The six stages of performance management process.
BMG314/03 Performance Management 26


Learning Activity 2.2
Critically appraise the performance management process in your organisation or an organisation of your choice. In what ways do you think the performance management could be improved?
Self-Check 2.2
Performance management process is a systematic process of managing and monitoring the employee's performance against their key performance parameters or goals. It is regarded as a process for driving the individual and organisational performance management.
An effective performance management and appraisals process focuses on aligning organisational workforce, building competencies, improving employee performance and development, and driving better business results.
Answer to Learning Activity 2.2
This is an open ended question. It could be as an approach to increase the effectiveness of people in organisation by improving the performance of the people at work. Performance management process in any organisation involves communication between the employee and the supervisor of expectations, goals, and the standards for measuring performance.
The employee needs to know the supervisor’s expectations and how the outcomes will be measured. The supervisor needs to assure that the employee is aware of the employees’ expectations and has a complete understanding of the job duties for the position. The performance management process provides a structure for employees and supervisors to communicate regarding performance issues and plan for professional development.
BMG314/03 Performance Management 27


2.3 STAKEHOLDERS AND SUCCESSFUL PERFORMANCE MANAGEMENT
Source: https://youtu.be/QP_juXJgHxs
The keys to executing a performance management system are establishing key metrics, tracking progress, and continuously improving the business (people, processes and technology) to achieve performance targets.
It is also important to identify potential road blocks. Think about any obstacles that could possibly prevent the employee or department from reaching a desired goal and how you may be able to avoid or overcome those obstacles.
It is important to involve stakeholders from key departments throughout the entire process to help you to identify the right metrics from the outset, and to facilitate transparency and accountability.
Unlike the once a year event of performance appraisal, performance management is a continuous process of providing directions, tracking and measuring progress, taking remedial actions and setting new goals. It does not dwell on the past but look towards the future.
It is a normal part of a manager’s responsibilities and not a difficult additional task. Only with top management’s support the review can be done consistently, and the results are sustained.
BMG314/03 Performance Management 28
Please watch this video to learn more about the key principles of performance management.
Duration : 4.31 minutes


The framework is as good as the commitment shown by the involved parties – managers, individuals and teams. Managers and individuals must clearly understand their roles and the reasons behind these actions. The continuous process of performance management is considered more important than performance appraisal because it benefits both the employees and the organisation as a whole.
Performance review should be formally conducted at least once a year. The review should be rooted in the reality of the individual’s performance. It is a concrete and transparent process. It allows managers and the employees to discuss gaps and expectations in a constructive manner.
In other words, it is a “reality check” by both the individuals and the managers. Individuals as employees should be encouraged to own their development and resolve barriers to higher performance that are within their control. Managers will step in for assistance. In this review, if the performance cycle has been closely followed, there will be no surprises.
Learning Activity 2.3
A good performance management system need to consider the stakeholder’s perspective to be successful. Discuss.
Self-Check 2.3
Building an effective performance management system starts with looking at organisational overall objectives and growth strategy. Alignment with the organisational strategic objectives is at the center of designing a performance management system that best meets your business’ needs.
Answer to Learning Activity 2.3
To make a performance management successful, it needs to consider the organisational stakeholders. It rests on the simple principle that “what gets measured gets done.”
In an ideal system, a business creates a cascade of metrics and targets, from its top-level strategic objectives down to the daily activities of its frontline employees. Managers continually monitor those metrics and regularly engage with their teams to discuss progress in meeting the targets. Good performance is rewarded; underperformance triggers action to address the problem.
BMG314/03 Performance Management 29


2.4 PERFORMANCE MANAGEMENT BEST PRACTICES
Source: https://youtu.be/W6q9Clo09VE
Some of the characteristics of a good performance management system include:
Strategic congruence
The system or individual goals should be congruent with the unit and organisation’s strategy.
Practicality
Systems that are good and easy to use (for example, user-friendly software) to facilitate decision-making. Overall, the benefits must outweigh the costs of using the system.
Thoroughness
All employees should be evaluated (including managers) and all major job responsibilities should be evaluated (including behaviours and results).
Meaningfulness
The standards and evaluations must be important and relevant, and performance assessment must be on those functions that are within the control of the employee.
BMG314/03 Performance Management
30
Please watch this video to learn more about performance management best practices
Duration : 1.17 minutes


Specificity
Reliability
A good system should provide detailed and concrete guidance to employees about what are the expectations and how to meet them.
Validity
The measures of performance should also be valid to include all relevant performance (all critical performance) facets, not deficient (do not leave any important aspects out), not contaminated (do not include factors outside of the control of the employee or factors unrelated to performance).
A good system should include measures of performance that are consistent and free of error even if two supervisors provided ratings on the same employee.
Acceptability and fairness
To verify these characteristics, ask the participants about distributive justice of the performance management system. Distributive justice includes perceptions of the performance evaluation received relative to the work performed, and perceptions of the rewards received relative to the evaluation received in particular.
So far, we have taken a good look at the characteristics of the performance management system. Involved in the process are various requirements and expectations particularly from all stakeholders.
Learning Activity 2.4
Describe the characteristics of some of the best practices of performance management that your organisation could emulate. Give reasons for your answer.
BMG314/03 Performance Management 31


Self-Check 2.4
When organisational leadership puts an emphasis on performance management, it sends a message to both managers and employees that professional development is an important priority. The message the organisation sends is “we want you to invest in this company, and we know that for you to do that we must invest in you first.” As with all strategic initiatives, the directive for a strong performance management system must come from the top. This is one of the best practices of performance management in most successful organisations.
Answer to Learning Activity 2.3
This is an open ended question. Answer varies according to the organisations.
Before determining what kind of performance management system your organisation should emulate, it is important to discern what the outcomes of the process should be. Is performance management used for making major decisions, such as compensation adjustments, promotions, or staff reductions? Is it used for employee development, shaping needed training, mentoring, and leadership development programmes? Is it used to reinforce corporate values and core business priorities?
Without this clarity, or with too many competing uses, a performance management system can sink under its own weight.
BMG314/03 Performance Management 32


2.5 SUMMARY
Now that you have completed Unit 2, you should be able to:
1. Describe the activities involved in the performance management process.
2. Discuss the purpose of a performance management system.
3. Identify the characteristics of a SMART goal.
4. Discuss the key best practices for performance management
2.6 REFERENCES
Aguinis, H. (2019). Performance management (4th ed.). Chicago, IL: Chicago Business Press.
Gregg Learning. (2017, 17 Mac). Purposes of performance management [Video file]. Retrieved from https://www.youtube.com/watch?v=Yjw-KHou3AY&feature=youtu.be
Gregg Learning. (2017, 14 Jan). HR basics: performance management [Video file]. Retrieved from https://www.youtube.com/watch?v=SyOZ_4rWWiY&feature=youtu.be
Pir, Sesil. (2017, Aug12). Tips for managers: key principles of performance management [Video file]. Retrieved from https://www.youtube.com/watch?v=QP_juXJgHxs&feature=youtu.be
Stern, I. (2017, Jul 26). The HR minute: performance management best practices [Video file]. Retrieved from https://www.youtube.com/watch?v=W6q9Clo09VE&feature=youtu.be
Wawasan Open University. (Year?). BMG310.05 Performance and compensation management course material Unit 1. Penang, Malaysia.
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http://www.wou.edu.my/


COURSE MODULE
Unit 3
PERFORMANCE APPRAISAL: AN OVERVIEW


U3
UNIT STRUCTURE
3.1
3.2
3.3
3.4
3.5 3.6
Key elements of Performance Appraisal
Learning Activity 3.1 Self-Check 3.1
Approaches to Performance Appraisal
Learning Activity 3.2 Self-Check 3.2
Who Would be the Raters or Appraiser?
Learning Activity 3.3 Self-Check 3.3
Rating in Performance Appraisal
Learning Activity 3.4 Self-Check 3.4
Summary
References
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PERFORMANCE APPRAISAL: AN OVERVIEW


U3
INTRODUCTION
PERFORMANCE APPRAISAL: AN OVERVIEW
Performance appraisal, also known as performance assessment, performance evaluation or performance review, is commonly used by many business and non-profit organisations in assessing the performance of employees. Performance appraisal is a formal interaction between an employee and his/her supervisor whereby information is collected, collated, analysed and documented for making specific decisions in a workplace context.
We have distinguished performance management and performance appraisal in Unit 1. While performance appraisal is often referred to as a specific formal event, performance management is a continuous process where the performance of an employee is managed to ensure the achievement of the targets set. In this unit, you will learn that performance appraisal as an important element in performance management.
When the need for performance appraisal is discussed, we must be aware that there should be some way for an organisation to determine whether employees are performing and bringing value to the organisation. As there is some pre-determined direction an organisation desires to achieve, resources and rewards should logically go to those who can contribute to the achievement of the organisation.
Consequently, for quite some time the element of control is foremost in the implementation of performance appraisal and with it there are issues and mistrusts on this control mechanism. In time, performance appraisal became a vital piece of the performance management system.
The need for continuous process of managing organisational human resources enhances the importance of performance appraisal as a set piece to achieve organisational objectives. With the introduction of technology and more efficient ways of capturing information, companies are able to amass valuable information on their human resource in the course of implementing their performance appraisal system.
It can be said that with the spread of performance management system in both big and small companies as well as in public and private sectors, performance appraisal has been given a chance to prove that it can be a positive and effective part of the organisation. Performance appraisal captures both the current capabilities and future potential of an employee. The assessment process is equally important as the appraisal outcomes for it to be effective.
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UNIT LEARNING OUTCOMES
By the end of this Unit 3, you should be able to:
1. Define performance appraisal.
2. Describe the framework of a performance appraisal.
3. Outline how staff performance is appraised.
4. Discuss who should be the rater or appraiser in a performance
appraisal process.
3.1 KEY ELEMENTS OF PERFORMANCE APPRAISAL
Source: https://youtu.be/o2mi8zhnhYM
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Please watch this video to understand more about the performance appraisal
Duration : 10.38 minutes


In Units 1 and 2, we have explored what performance management is all about, its benefits, the processes, best practices and related areas including its differences with performance appraisal. In this Unit, we will be looking at performance appraisal which is an important component of performance management process.
Definitions
The following are definitions of performance appraisal from various sources.
01
02 03
04
Performance appraisal is a formal system of review and evaluation of individual or team task performance — R. Wayne Mondy, Human Resource Management p. 236.
Performance appraisal”...is the ongoing process of evaluating employee performance. Performance appraisal should not be simply a once-or twice-a-year formal interview” — Lusier and Hendon, Chapter 8 Performance Management and Performance Appraisal p. 277.
“Performance appraisal means evaluating an employee’s current and/or past performance relative to his or her performance standards”. Gary Dressler, Fundamentals of Human Resource Management, Pearson International Edition, p. 221
A performance appraisal is the process by which an organisation assesses the job-related performance and development of its employees. The process is twofold: (1) rating performance against company-set standards, and (2) providing feedback as to quality of work performed. — Jerry W. Gilley and Ann Gilley, The Praeger Handbook of Human Resource Management, p. 132.
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05
The various performance appraisal definitions mentioned earlier provide some common characteristics of performance appraisal. Listed below are some elements required for an effective performance appraisal:
Firstly, the coverage of the performance appraisal, One should target all employees whether in teams or as individuals by comparing some standards. These standards would imply that it is aligned to the strategic directions and goals of the organisation.
Secondly, the focal point of assessment is on employee’s performance – both past and present performances. In assessing performance, the future potential of the employee is implied as it is an ongoing process. Action is needed to ensure performance is on track and action taken for shortfalls. Thus while historical performance is important, development to ensure future performance will also be important in this process.
The next element is individual performance being monitored in the context of its link to the organisation. If individuals as a whole do well, the organisation will benefit. Thus alignment of goals is essential for goal setting.
The element of ensuring that it is a “pay for performance” philosophy must guide the action related to performance appraisal. The use of performance review for the purpose of evaluation is to motivate and ensure continuous performance improvement.
“Activities through which organisations seek to assess employees and develop their competence, enhance performance and distribute rewards”. — Fletcher, C (2001) Performance Appraisal and Management: The Developing Research Agenda, Journal of Occupational and Organizational Psychology, 74(4): 473–87.
01
02
03
04
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Information is another vital element that makes performance appraisal an essential process. Information collected from formal performance review as well as the continuous dialogue sessions provide information that will guide career and succession planning and organisation development.
Finally, the last element is that if human resource is going to sustain its contributions, it has to be “fit for the purpose” on a continual basis. The periodical review sessions will certainly discipline the managers to take time out and ensure that the employees are on track. It is also to calibrate whether the job match is there and if not, what actions can be taken to ensure the right person for the right job.
An employee believes that objectivity in the assessment process will improve through collecting feedback. For feedback to be useful, it has to be objective and consistently delivered in a constructive and honest manner. It helps employees to understand their strengths and weaknesses and the areas in which they need to improve their performance.
Performance appraisal is a periodic evaluation of an employee’s work performance. To be effective, a performance appraisal system, at the minimum, must contain the essential elements as discussed so far. While usually a formalised session, it is supported by the continual support of the supervisor or manager.
Therefore, performance appraisal system is not a “stand-alone” process; it is an integral and vital part of the whole performance management process. Therefore, performance appraisal can be seen as both formal and informal. The formal session can be a once or twice in year event but the informal session can be as often as it is required.
A systematic appraisal is used when the contact between manager and employee is formal, and a system is in place to report managerial impressions and observations on employee performance.
The informal session is conducted whenever the supervisor sees the need to intervene for the improvement of the employee’s performance. It is usually on-the-spot and immediate to the need.
The longer such feedback is delayed, the less likely will it be effective. The issue of performance interview and feedback will be discussed in greater detail later on.
05
06
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Learning Activity 3.1
Based on your current organisation or organisation of your choice, what are the likely strategic purpose of a performance appraisal system?
Self-Check 3.1
A performance appraisal is the process by which an organisation assesses the job-related performance and development of its employees. Performance appraisals are tools used by organisations and employees to help gauge the value of the employee's performance, and determine how performance can be improved.
The purpose of a performance appraisal system is to evaluate how well employees perform their job duties and tasks, their supervisory and leadership capabilities and other soft skills, and how well they manage workplace relationships and conflict resolution.
Suggested Answers to Learning Activity 3.1:
Performance appraisals act as a basis for evaluating the performance of an employee for reward purposes. This purpose can be translated into making decisions on promotions, salary increments, training and development, and in some extreme situations can result in transfers, demotions and terminations.
One of the strategic objectives of performance appraisal is to spot problems with employees' work, including efficiency and quality, so that action can be taken to improve the organisation's overall performance.
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3.2 APPROACHES TO PERFORMANCE APPRAISAL
Source: https://youtu.be/9dXBiEMMC_8
Performance appraisal is commonly mistaken as performance management. In Unit 1, we have compared performance management with performance appraisal. For our purposes here, you should note that performance appraisal focuses on the individual while performance management has a broader focus on the group or team contributions as a whole. In this unit, you will focus on issues and concerns that vary from various individuals when the appraisal process is being implemented. Performance appraisal starts with performance measurement which can be judged on relative and absolute terms. Other than that, performance measurement systems can also be made based on the data collected; whether they are on trait data, behavioral data, or outcome data.
So the question that automatically arises is which is the best approach. It will depend on the nature of the job we are looking at. For example, what is the function of that particular job and what are the requirements for the job to be done successfully? With those aspects known, one can look into closer details when the appraisal is done. One can, often apply the acid test on whether the outcomes which are being measured are valid, uniform, reliable and consistent.
A measure is valid when it measures that process which is intended to be measured. The measure is reliable when it yields the same results each time it is used to measure the same thing. We say the measure is uniform when we can apply the same measurement in the same way for the same job, meaning there is uniformity in application. Ultimately whatever the measures are used to judge, they have to be acceptable and feasible to both the rater (appraiser) and ratee (apraisee).
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Please watch this video to understand more about results-based approaches of performance appraisal
Duration : 2.33 minutes


Learning Activity 3.2
Critically appraise the performance appraisal process in your organisation or an organisation of your choice. In what ways do you think the performance appraisal could be improved?
Self-Check 3.2
In a nutshell, performance appraisal approaches helps organisations apply their strategy throughout the organisation to ensure that all their goals are being met. The idea is that if the organisation communicates simple, realistic, and appropriate guidelines and expectations, it can better ensure that its employees will adopt and work towards achieving the organisational goals.
Suggested Answer to Learning Activity 3.2
Just like the performance management process, performance appraisal in any organisation involves communication between the employee and the supervisor of expectations, goals, and the standards for measuring performance.
The employee needs to know the supervisor’s expectations and how the outcomes will be measured. The supervisor needs to assure that the employee is aware of the employees’ expectations and has a complete understanding of the job duties for the position.
The performance appraisal process also provides a structure for employees and supervisors to communicate regarding performance issues and plan for professional development.
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3.3 WHO WOULD BE THE RATER OR APPRAISER?
Source: https://youtu.be/Dt0vf7fl0lQ
The appraisal method and the standard operating procedures to conduct the process will be furnished by the HR. The operating head of division with consultation of the HR will decide the parties to be involved in rating. In short, the appraisers can be more than one and can come from the appraisees’ own functional areas or be an outsider. Therefore, there are a number of different options on the choice of appraisers.
Direct report supervisor
The appraisee’s supervisor will logically and instantly come to mind during an appraisal. It is assumed that he/she is in frequent contact and able to observe the appraisee at work with a detailed knowledge of the work. After all, the appraisee’s performance will have a direct impact on the appraiser’s performance as well.
Therefore, it makes sense for the supervisor to closely monitor the surbodinate’s job. But what if the supervisor resides in a remote location from the surbodinates? Or for some reasons, the supervisor prefers to have infrequent contact with the subordinates.
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Please watch this video to understand more about performance appraisal.
Duration : 4.53 minutes


It could also be the case that the supervisor is not fully conversant with the subordinate’s work. For example, internal business or virtual organisations where the surbodinates work in one country and the supervisor stays in another country. Should this be the case, there is likelihood that the supervisor may not be completely objective or may even cause a personal bias for, or against certain employees.
The workplace is increasingly complex and the job volume and nature of the job are becoming more complicated or require specialised knowledge. Thus it is equally likely for the need of multiple appraisers and multiple measurements to provide a fair and rounded view of the employee’s performance. As an example in an international assignment, it is more appropriate for the home country supervisor or country manager to appraise the employee.
Indirect supervisor
There can be some basis that the superior to the supervisor can also be considered. Even though he/she is one level above the subordinate, he/she may have a detached view particularly where the organisation has an “open” culture and hierarchy is not of considerable importance. The drawback can be that the line manager may not have a day-to-day experience to make a detailed judgement.
Team/Peers
It may be a case where the co-workers know the job of the individual employee better than the supervisor does, and they are more directly impacted by the employee’s actions. This is where peer evaluations may be valuable to gauge on different aspects including his/her interpersonal effectiveness, communication skills, reliability and initiative etc.
Elements of peer evaluation are often used for certain training programmes or project-based exercises. It is particularly relevant where the team has worked over a reasonable duration of time. However, research evidence indicates what the peers think seems to have more impact on the individual and therefore have a direct influence.
Nonetheless the validity is not too conclusive as peer evaluations may be influenced by personality conflicts resulting in prejudice and inaccurate assessment. Peer bonding may be too strong that there may be reluctance to “spill the beans” over fellow team members.
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To minimise such exceptional issues, the ratings can be moderated to reflect the overall ratings by the rest of the appraisers and to keep the process confidential. Otherwise, it can be modified along the format of 360-degree evaluation.
On the whole, peer evaluations can provide helpful insights to the employee’s performance. It is also inevitable where virtual teams are becoming more and more frequent. However, it is still an open question whether teams can handle administrative appraisal. So group appraisal is best used for developmental purposes.
Subordinates
“Upward feedback” can apply to aspects like managerial style, communication, delegation, impartiality, etc. Therefore, such evaluation can be applied on manager-level employees to give good insight into the managerial practices and missteps of their superiors.
This method is widely used by universities and colleges where students are asked to rate on their lecturers and professors. This valuable information is unavailable using any other means. Information gathered can be used for the manager’s career development as well as weeding out incompetency. The drawback can often be the fear of reprisals which often compels a subordinate to be dishonest in his rating. It is preferred that if used, the identity of the subordinates ought to be confidential.
Bias by the subordinate can arise if there is perceived injustice done by the superiors, personality conflicts or for whatever reasons subordinates are retaliating against their supervisors. Subordinates can also inflate the positive ratings for their bosses if they are not completely familiar with the boss’s scope of work.
The roadblock would be if the manager is not open to correction and take negative ratings personally. It would be vital for the company to cultivate the correct attitude of managerial openness should such a practice be decided upon.
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