Definition Of Performance Management Business Essay


In todays working environment competition keeps on increasing. Many of the workers are well qualified and therefore, they are entrusted higher responsibilities. Within the work place, all workers are given their part of work and they must meet the requirements expected from them. As such, many work places have a system called Performance Management System, which is actually a scheme to motivate workers to give their best performance for they will be evaluated and also be rewarded for their hard work. Moreover in public sectors, such initiatives are well known to burst the performance of staffs. Therefore, the PMS lies at the heart of the Human Resource Management of public sectors.

2.2 Definition of Performance Management

Performance Management (PM) contains actions that ensure that goals are constantly being met in an effective manner. It can also be defined as a tool to implement strategy. It can be useful in communicating goal, objectives, reinforce individual responsibility to meet these goals. Performance Management is a systematic process where work place involves its employees in improving the work effectiveness by focusing them on achieving the organization mission and strategic goals.

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Performance Management can also be defined as an ongoing process of communicating and illustrate job responsibilities, priorities and performance expectations in order to ensure mutual understanding between higher level management and employees. It encourages a development in the management which enables them to obtain feedback and promote teamwork. It focus more on communication and adding value by endorsing improved job performance and encouraging skill development. Performance Management involves clarifying the job duties, defining performance standards and documenting, evaluating and discussing performance with each employee. (Indiana University, 24.02.05)

Figure 1: Performance Management Process

Source: (Indiana University, 2005)

"Performance management is the process of creating a work environment or setting in which people are enabled to perform to the best of their abilities. Performance management is a whole work system that begins when a job is defined as needed." (Susan M. Heathfield, 2012)

Another definition of Performance Management is "You can achieve performance levels once thought unattainable but only when managers and workers establish clear lines of communication and understand how their jobs contribute to the goals of both themselves and the work place. Performance Management is the comprehensive guidebook on how to establish a communication system to get top performance and value from each employee. It leads to how to conduct goals- focused performance, planning meetings and performance appraisals and foster a true commitment to success within each employee. Performance Management will benefit the employee, the manager ant the work place itself. (McGraw-Hill Professional, 1999)

2.3 How does Performance Management System work?

Performance Management is the systematic procedure where employees and member of the group work in improving the governmental effectiveness in the accomplishment of mission and goals. As such the employee Performance Management includes a working cycle as shown below:

2.3.1 Performance Management Cycle

Figure 2: PM cycle

Source: (


In an effective work place, work is planned out in advance. Planning means setting performance expectations and goals for group and individuals to channel their efforts toward achieving the organizational objectives. It's important to get employees involved in planning process as this help them to understand the goals and therefore what needs to be done, why it needs to be done and how well it should be done.

The requirements for planning employees' performance include establishing the elements and standards of their performance appraisal plans. It should be measurable, understandable, verifiable, equitable and achievable. Employee performance plans should be flexible to adjust to any changes in objectives and work requirements.


Projects are monitored continually in an effective organization. Monitoring means consistently measuring performance and providing ongoing feedback to employees and team members on their progress toward reaching their goals. The regulatory requirements to monitor performance include conducting progress reviews with the employees where in fact their performance is compared against their element and standard. Continuing monitoring gives the opportunity to check how well employees are meeting predetermined standards and to make changes to unrealistic and problematic standards. And having a continuous monitoring helps to identify unacceptable performance at any time during the appraisal period and also assistance to address such performance.


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Developing means increasing the capacity to perform through training, giving assignments that introduce new skills or high levels of responsibility, improving work processes or other methods. Thus, in an effective organization employee developmental needs are evaluated and addressed. Providing employees with training and developmental opportunities encourage good performance, strengthens job related skills and competencies and helps employees keep up with changes in the workplace.


From time to time, summarizing employee performance is important. This can help in looking at and comparing performance over a period of time or among employees. This enables to know who the best performer is.

Rating can hence be defined as evaluating employee or group performance against the elements and standards in an employee's performance plan and assigning a summary rating record. The rating of record has a bearing on various other personal actions such as granting within grade pay increases and determining additional retention service credit in a reduction in force.


Rewarding means recognizing employees, individually and as a member of a group, for their performance and acknowledging their contributions to the mission.

Good performances don't need a nomination for formal awards to be solicited to be recognized. It is an ongoing process. Award regulations provide a broad range of forms that more formal rewards can use, such as cash, tome off, and many nonmonetary items.

Managers and employees have been practicing good performance management, executing each key component process well. Goals are set and work is planned regularly. Progress toward those goals is measured and employees get feedback. High standards are set but care is also taken to develop the skills needed to reach them. Formal and informal rewards are used to recognize the behavior and results that accomplish the mission. All five components processes working together and supporting each other achieve natural effective performance management. (

2.4 Benefits of Performance Management

Enhance quality of work life:

Employees' work life change as they have new experiences and when evaluating their performance and their success being shown, they become more confident and have a greater job satisfaction.

Increase employee responsibility:

There is new way to make employees responsible for their decision making and also actions taken by them and this is by communicating realistic and challenging work to them and therefore make them understand what is expected from them. That is their job expectation, which will hence, make them committed to the organization as well.

Pulling together:

An effective performance management with a well defined objective will help employees to better understand how they are contributing in the organization productivity and thus, boost their motivation. Moreover, this will help to ensure that employees are working together toward the same goals.

Happy workers:

With a performance management system at work, this will enable employees to know their value in the organization, as such improve their personal motivation. Hence, workers will surely respond well to praises and they are likely to double their efforts towards higher target.


Performance management can also help to establish a good communication between employees and employers. Employees can feel free to discuss any matters with managers or supervisors and therefore exchange opinions and find solution to the related matters.

Feedback for employees:

When evaluation is done on a regular basis, and feedback provided to employees, they may find it easier to do their job, as they will be able to understand what is expected from them. This will also help them to have a better and clear objectives and how they should improve. Consequently, they will feel encourage also to perform better. (Thales- Training & Consultancy, 2011)

2.5 Performance Appraisal

Performance Appraisal (PA) can be defined as the process of analyzing employee's performance and keeping records of their work. It is a review of employee's assigned responsibilities and tasks. Therefore, evaluating employees' performances in terms of required expectations.

According to Newstrom (1992), PA "is the process of evaluating the performance of employees, sharing that information with them and searching for ways to improve their performance."

"Performance appraisal is the systematic description of an employee's job relevant strengths and weaknesses." (Wayne F.Cascio's, 1989)

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"Performance appraisal should focus on three objectives: performance not personalities; valid, concrete relevant issues, rather than subjective emotions and feelings; reaching agreement on what the employee is going to improve in his performance and what you are going to do." (McKirchy, 1998)

2.6 Purpose of Performance Appraisal

Performance appraisal is done mainly to evaluate performance of employees and as such see to it that the organizational objectives are being met via the employee's dedication in work. The following are some example why PA is needed in an organization:

Career Development

This help in an opportunity for career counseling and help in succession planning of the organization. Moreover, it provides the opportunity to discuss about career objectives and how to assess in developing individual abilities.


Feedback provides a two way communication between employees and supervisors or managers. This can also provide a constructive discussion on how the employee's performance is seen as feedback can either strengthen performance or encourage employees to work better or give the opportunity to discuss about performance deficiencies.

Organizational Goals

The purpose of PA can also be a way o communicate and clarify organizational expectations to its employees and provide opportunities to assess employees' performances with the organizational goals.

Administrative uses of PA

This enables to identify the poor performers and who are the better performers and therefore take action as to whether promote the good performers, increase salaries or how to reward them and as for the poor performers see that they are given a development program to help them improve.

Performance history

Performance history is not dependent upon human memory, rather it may b useful in personnel decisions including compensation decision making. In addition, provide the occasion to review and compare past and present performances and analyzing strength and weakness of employees. (, 2010)

2.7 Types of Performance Appraisal

Different PA methods differ in suitability and effectiveness. The methods stated herein are some of the many methods used in employee performance appraisal.

2.7.1 360 Degree feedback:

360 degree feedback is one of the current topic and being taken into consideration in management evaluation and assessment and is considered to be an innovative approach in PA.

This process consists of assessing colleagues that work around themselves. It is an anonymous assessment, and this enables each employee to receive and gives their feedback on their colleagues.

2.7.2 Management by Objectives (MBO):

MBO is a process by which both managers and employees set their objectives that they should meet and work toward this objective. Later they will assess their performance and based on the results obtained, they will be rewarded.

As such, MBO is more concerned on what to achieve rather than how the objectives have been met.

2.7.3 Critical Incident Method:

This type of PA is a method which describes incidents of employees whether they did well in their job or need improvement during their performance period. Managers analyze the negative and positive behavior and performance of employees.

2.7.4 Graphic Rating Scale:

This is one of the oldest methods of PA and most used one. Graphic rating scale is the simple way to rate the performance of employees. It assesses the performance of employees between the minimum and maximum number of the rating scale.

2.7.5 Behaviorally Anchored Rating Scales (BARS):

BARS is a mix of rating scale and critical incident methods of PA. As the name mentioned it, BARS basically rates on the behavior of the employees at work. The attitude and behaviors of employees are being assessed. This also provides how effectively or ineffectively they performed in work.

2.7.6 Ranking Methods:

This method rate employee from their highest to lowest performer. Moreover, managers compare an employee to another employee. Each employee will b evaluated compare to another one on a scale of best to worst performer.

2.7.8 Essay Evaluation:

Essay evaluation is a qualitative technique of obtaining information. Managers must point out the strength and weaknesses of employees and present it in a written format in a paragraph.

2.7.9 Assessment Centers:

This method was previously used to select employees and managers. Now it has become a method of PA. The individual is assessed on different criteria such as psychological tests, management games, oral presentation and other exercises. They are then judged and decide on their appraisal. (, 2010)

2.8 Performance Appraisal at a Civil Service

In Mauritius, the type of performance appraisal used in the civil service is called Confidential Report (CR). It is a descriptive report that is prepared by the employee's supervisor and presented at the end of year. What the supervisor or manager think of its employee is written in this CR. They highlight the strength and weaknesses of employees and give it in a written form and it is strictly confidential. The employee is not given any details about the report. And besides, they are not submitted to any feedback.

In the government sector, performance appraisal should start with a performance agreement based on pre-determined work plan, continued with regular reviews and completed with a general review of performance, assessment of development needs and recognition of performance.

PA at the individual level is an ongoing process between an employee and his supervisor. The PA process, covering a twelve months period consists of 3 phases:

Pre-appraisal: Planning and agreeing on performance

Mid-appraisal: managing performance

Final appraisal: appraising performance

All relevant information pertaining to the performance of employees is recorded on a PA form (annex A & A1; workmen group).

This is a record of an officer's individual performance and contribution to the achievement of the Ministry/Department's strategic goals and objectives for a given period. The original of the form should be kept by the Appraiser and handed over to the Personnel Section after the final appraisal phase. A copy of the form is kept by the Appraisee.

2.9 Motivation at Work

Motivation is a process that initiates that bring out the inner power within an individual to keep goals focus behavior alive. Motivation is what causes people to act, to perform and to achieve something. This is what strengthen someone ambition, give the willingness and direction to meet someone's goal.

"When we suggest factors (or needs) that determine the motivation of employees in the workplace, almost everyone would immediately think of a high salary. This answer is correct for the reason that some employees will be motivated by money, but mostly wrong for the reason that it does not satisfy others (to a lasting degree). This supports the statement that human motivation is a personal characteristic, and not a one fits all option." (, 2010)

Motivation is a very important factor in an organisation. Without being motivated to work, employees won't perform well. Motivation is needed to reach goals that have been set. Moreover, motivation has a direct effect on the productivity of the organisation. Therefore, if these employees are not motivated, the organisation will fail to meet its goals and objectives and also affect its production.

Employees are the greatest asset of an organisation, and no matter how efficient the technology and equipment may be, it is of no match to the effectiveness and efficiency of the employees.

Motivation was defined as "the psychological process that gives behavior purpose and direction." (Kreitner, 1995)

According to Buford, Bedeian & Linder (1995) "Motivation is a predisposition to behave in a purposive manner to achieve specific, unmet needs"

2.9.1 Intrinsic and Extrinsic Motivation

There exist many theories of what motivates people, and consequently people are motivated both by internal and external factors, as there is always a mixture of reasons why you do, achieve, behave, learn and react. Every behavior has a underlying cause, and understanding the cause of behavior and motivating factors is key to changing or improving outcomes. (Novella Thompson, 2011).

Intrinsic Motivation:

Intrinsic motivation is defined as doing something for personal reason. It comes from inside of that individual. When someone is intrinsically motivated, they will find pleasure in what they are doing and enjoy it because it is not something they are being pressurized to do.

In addition, when a person is intrinsically motivated, they will look for competency and skill development and be more focus on personal accomplishment.

Extrinsic Motivation:

Extrinsic as the name can describe is external factors or tangible rewards that motivate people. It reflects the desire to do something only to obtain something else in return, such as money, praises or awards. These kinds of people, does not really enjoy what they are doing because they engaged to do something only for some external purpose.

2.9.2 Theories of Motivation

Motivation theories try to explain why employees are motivated by and satisfied with one type of work than another. It is important that managers have a basic understanding of work motivation because highly motivated employees are more likely to produce a superior quality product or service than employee who lack motivation.

At one time, employees were considered just another input in the production of goods and services. What perhaps changed this way of thinking about employees was research referred to as the Hawthorne Studies conducted by Elton Mayor (Dickson, 1973). This research found employees are not motivated solely by money and employee behavior is linked to their attitudes (Dickson, 1973). The Hawthorne Studies began the human relations approach to management, whereby the needs and motivation of employees become the primary focus of managers (Bedeian, 1993)

There are many different ways as to what motivates workers. The most commonly theories used are discussed below. And each theory has its own conclusion.

2.9.3 Mayo:

Contrary to Taylor, Mayo believed that money is not what all matters to workers, there are more than that. Workers are motivated by meeting their social needs. Mayo focuses more on the fact that managers should put more emphasis in interacting with their workers.

After doing some research, Mayo concluded that workers are motivated by:

Better communication; that is, there is interaction between managers and workers and therefore, any misunderstanding or any problems can be dealt between them.

Greater Management Involvement; managers should be more present in employees working life.

Working in groups or teams; employees feel more motivated and encourage working when they are in group or teams are working together in a friendly environment.

2.9.4 Maslow:

Abraham Maslow along with Frederick Herzberg focused more on the psychological needs of employees. Maslow came up with a theory where there are five levels of human needs which employees need to have fulfilled at work.

Organization should therefore offer different incentives in order to help the employees fulfill their needs in turn and progress up the hierarchy (see below).

Figure 3 Maslow Hierarchy of Need

2.9.5 Herzberg:

Frederick Herzberg had a two factors theory of motivation. The two factors were Hygiene factors and Motivators.

According to Herzberg, motivators are more concerned with the actual job itself, for example; extra responsibility, recognition and promotion, whereas, the Hygiene factor is a factor that surround the job, such as reasonable pay, safe working conditions.

2.9.6 Mc Gregor Theory X and Y:

Basic nature of employees that Mc Gregor has characterized in two type.

Theory X:

Employees who are very committed to their work. They always seek for new challenge, and accept any work given to them. They are motivated workers and very dedicated. They accept responsibilities and can be very creative throughout their work.

Theory Y:

Employees that are contrary to Theory X. they are lazy workers that refuse responsibilities. They must be supervised and threaten to do the work. They don't display any ambition at work and are often punished.

2.10 Motivation is the key to Performance Improvement

There is an old saying "you can take a horse to the water but you cannot force it to drink; it will drink only if it's thirsty"- so is it with people. People will do what they want to do or what motivated to do.

Performance is said to be a function of ability and motivation, and there is a formula that is made from that;

Job Performance = f (ability) (motivation)

Ability depends on the education, experience and training provided to the employee. And its ability is a slow and long process. As for motivation, it can be improved rapidly.

There are 7 strategies for motivation:

Positive reinforcement

Effective discipline and punishment

Treating people fairly

Satisfying employees needs

Setting work related goals

Restructuring jobs

Base reward on job performance

Motivation, as such is a guide towards goals stated by motivator. The motivational system must be tailored to the organization's situation.

2.11 Job Satisfaction

"Job satisfaction is defined as "the extent to which people like or dislike their jobs." (Spector, 1997). Job satisfaction is a general or global affective reaction that individuals hold about their job. While researchers and practitioners must often measure global job satisfaction, there is also interest in measuring different "facets", or "dimensions" of satisfaction. Examination of these facets conditions is often useful for a more careful examination of employee satisfaction with critical job factors. Traditional job satisfaction facets include co-workers, pay, job conditions, supervision, nature of the work and benefits." (Williams, 2004)

Moreover, according to Ilham (2009), employee satisfaction refers to the positive or negative aspects of employee's attitude towards works. Employee satisfaction is the expressions used to describe the feeling of employees, that is whether they are happy and fulfilling their needs at work.

2.11.1 Herzberg's Theory on Job Satisfaction

"Frederick Herzberg (1950) is well known for his motivational theory. But after doing some research and analyze them, he developed his theory in two dimensions to job satisfaction.



Motivation as per Herzberg can create satisfaction by fulfilling individual's needs and personal growth. They are issues such as achievement, recognition, the work itself, responsibility and advancement.

Hygiene on the other hand cannot motivate employees according to Herzberg, but it can minimize dissatisfaction. Hygiene topics include company policies, supervision, salary, interpersonal relations and working conditions. They are issues related to employee's environment.

Once hygiene areas are addressed, the motivators will promote job satisfaction and encourage production." (Fam Pract Manag, 1999)

Hygiene issues (dissatisfiers) Motivators (satisfiers)

Company policies Achievement

Supervision Recognition

Salary Work itself

Interpersonal relations Responsibility

Working conditions Advancement

2.11.2 5 Job Satisfaction Factors

According to a survey done in 2009 by the Society for Human Resource Management, there are top 5 job satisfaction factors. (Christiane, 2010)

Job security


Compensation/ pay

Opportunities to use skills and abilities

Feeling safe in the work environment

2.11.3 Job Satisfaction In Relation To Job Performance

The relationship between job satisfaction and employee's performance has always been part of organizational behavior and human resource management. According to Rabins (1999), job satisfaction and performance can be summarized as "productivity of a happy worker is higher". Job satisfaction lead to higher productivity, organizational responsibility, physical and mental health, so a person will work with better mood and will learn more skills and finally promotion in his performance (Comber. Barriball, 2007).