1. Performance Planning: Performance planning is the first crucial component of any performance management process which forms the basis of performance appraisals.

   Performance planning is jointly done by the appraisee and also the reviewee in the beginning of a performance session. During this period, the employees decide upon the targets and the key performance areas which can be performed over a year within the performance budget., which is finalized after a mutual agreement between the reporting officer and the employee.

2. Performance Appraisal and Reviewing: The appraisals are normally performed twice in a year in an organization in the form of mid reviews and annual reviews which is held in the end of the financial year.

   In this process, the appraisee first offers the self filled up ratings in the self appraisal form and also describes his/her achievements over a period of time in quantifiable terms. After the self appraisal, the final ratings are provided by the appraiser for the quantifiable and measurable achievements of the employee being appraised.

   The entire process of review seeks an active participation of both the employee and the appraiser for analyzing the causes of loopholes in the performance and how it can be overcome. This has been discussed in the performance feedback section.

3. Feedback on the Performance followed by personal counseling and performance facilitation: Feedback and counseling is given a lot of importance in the performance management process.

   This is the stage in which the employee acquires awareness from the appraiser about the areas of improvements and also information on whether the employee is contributing the expected levels of performance or not.

   The employee receives an open and a very transparent feedback and along with this the training and development needs of the employee is also identified.

   The appraiser adopts all the possible steps to ensure that the employee meets the expected outcomes for an organization through effective personal counseling and guidance, mentoring and representing the employee in training programmes which develop the competencies and improve the overall productivity.

4. Rewarding good performance: This is a very vital component as it will determine the work motivation of an employee. During this stage, an employee is publicly recognized for good performance and is rewarded.

   This stage is very sensitive for an employee as this may have a direct influence on the self esteem and achievement orientation. Any contributions duly recognized by an organization helps an employee in coping up with the failures successfully and satisfies the need for affection.

5. Performance Improvement Plans: In this stage, fresh set of goals are established for an employee and new deadline is provided for accomplishing those objectives.

   The employee is clearly communicated about the areas in which the employee is expected to improve and a stipulated deadline is also assigned within which the employee must show this improvement. This plan is jointly developed by the appraisee and the appraiser and is mutually approved.

6. Potential Appraisal: Potential appraisal forms a basis for both lateral and vertical movement of employees. By implementing competency mapping and various assessment techniques, potential appraisal is performed. Potential appraisal provides crucial inputs for succession planning and job rotation.

Competency based management systems are primarily employee centric performance management systems and focuses upon how an organization achieves a desired performance. By aligning competencies within the performance management framework, the supervisors provide a feedback to the employees on the performance goals achieved and how the work was performed.

Competency focused performance management systems can serve as a useful tool for helping the employees in understanding the performance expectations and improving the competencies. Competency based management are strategic in nature and influences almost every area of human capital management which starts with the hiring of an employee and ends with the retirement. It aims at standardizing and integrating all HR activities by relying upon competencies which support fulfillment of organizational goals.

For example, Maruti Udyog Limited which was a joint venture with Suzuki of Japan realized the need of aligning HR strategies with the corporate strategies by linking competency mapping with the major systems of HR.

Deregulation in India in 1998 drastically declined the market share of Maruti which was earlier the undisputed leader in the automobiles industry. Reforms like competency mapping, job rotations, improvements in the appraisal system, initiatives in implementation of a transparent system of feedback and communication, clear definition of job profiles and their accountabilities and many others, improved the competitiveness of Maruti.

Performance management systems are based on personal competencies which distinguish high performers from the average performers and the personal competencies are derived from the values and core competencies of an organization (Reagan, 1994).

According to Collins and Porras (1996), organizations which use core competencies based systems are regarded as high performers or visionaries.

Competencies are primarily job specifications concerned with the knowledge, skills and abilities of an individual which defines the personal as well as the organizational success (Englemann & Roesch, 1996). The same researchers listed personal competencies as achievement orientation, team work, analytical thinking, relationship building, customer service orientation, etc.

Individual competencies drive excellence in an organization as they are utilized as a yardstick for evaluating and monitoring both individual and organizational performance and their effectiveness (Antonacopoulou & FitzGerald, 1996).

Competencies can be integrated with the performance management process by any of the two ways:

1. By identifying and defining the key competencies required for realizing the performance goals/objectives: The key competencies are jointly defined by the manager and the employee during the stage of setting performance plans, goals and objectives. These competencies are ultimately assessed during the performance review period in connection with the performance goals/objectives realized by the employees.

2. By identifying the competencies which are required for performing an employee’s job/role into the performance management process: In the case, the competencies are identified from the competency profile from the employee’s role or job point of view and also include the performance goals/objectives for being reviewed.

   The performance goals/objectives deal with the aspect of what must be achieved over the entire period of review and the competencies address the question of how an employee achieved the pre determined performance goal by demonstrating an expected pattern of behavior.

Competencies are aligned in each phase of the performance management cycle. CPS Human Resource Services has designed a model on Strategic Performance Management which is given below:

CPS Human Resource Services treats the process of performance management as a gap closing strategy, which focuses upon the vision, mission and values of the organization, the goals and objectives of the agency, individual goals and objectives and also the core competencies.

Organizations like Wipro and Infosys, the major IT giants of India give a lot of importance to competency based performance management system. In Wipro, the performance management process begins with the identification and assessment of critical competencies for top management, senior management and middle management on the basis of critical incidents, focus groups and rigorous interviews.

360 degree feedback is used for providing a feedback on the existing competencies of the employees and based on the results of the feedback a training programme is organized for improving the deficit areas of performance.

Finally, personal development plans are formulated for each employee for monitoring and tracking the improvement in competencies or skill sets. For building competencies, Wipro focuses on strategic thinking, vision, building star performers and global focus. Infosys equally gives a lot of importance to 360 degree feedback for evaluating the critical leadership competencies of their employees.

• Ensuring that the employees understand the importance of their contributions to the organizational goals and objectives.
• Ensuring each employee understands what is expected from them and equally ascertaining whether the employees possess the required skills and support for fulfilling such expectations.
• Ensuring proper aligning or linking of objectives and facilitating effective communication throughout the organization.
• Facilitating a cordial and a harmonious relationship between an individual employee and the line manager based on trust and empowerment.

Performance management practices can have a positive influence on the job satisfaction and employee loyalty by:

• Regularly providing open and transparent job feedbacks to the employees.
• Establishing a clear linkage between performance and compensation
• Providing ample learning and development opportunities by representing the employees in leadership development programmes, etc.
• Evaluating performance and distributing incentives and rewards on a fair and equated basis.
• Establishing clear performance objectives by facilitating an open communication and a joint dialogue.
• Recognizing and rewarding good performance in an organization.
• Providing maximum opportunities for career growth.

An effectively implemented performance management system can benefit the organization, managers and employees in several ways as depicted in the table given below:

Clearly defined goals, regular assessments of individual performance and the company wide requirements can be helpful in defining the corporate competencies and the major skill gaps which may in turn serve as a useful input for designing the training and development plans for the employees. A sound performance management system can serve two crucial objectives:

Evaluation Objectives

• By evaluating the readiness of the employees for taking up higher responsibilities.
• By providing a feedback to the employees on their current competencies and the need for improvement.
• By linking the performance with scope of promotions, incentives, rewards and career development.

Developmental Objectives

The developmental objective is fulfilled by defining the training requirements of the employees based on the results of the reviews and diagnosis of the individual and organizational competencies. Coaching and counseling helps in winning the confidence of the employees and in improving their performance, besides strengthening the relationship between the superior and the subordinate.

In a nutshell, performance management serves as an important tool for realizing organizational goals by implementing competitive HRM strategies. It helps in aligning and integrating the objectives with the KPI’s in an organization both vertically and horizontally across all job categories and the levels and thus helps in driving all the activities right from the bottom level towards one single goal.

Absenteeism or taking leave from work is a growing problem for many organizations that have to deal with the loss of employee time and productivity which then result in decreased earnings and revenues for these organizations.

While legitimate leave of absence from work is usually taken as the norm and is indeed sanctioned in the form of annual leave and holidays apart from sick leave, in recent years, employees in many organizations have begun to take extended breaks from work be it for personal or health or any other reasons. It is not the case here that employees must not take leave of absence.

Rather, the contention of this article is that prolonged and unnecessary leave of absence as well as unplanned and disruptive leave of absences must be regulated if the organizations have to remain profitable and at the same time, the employees put in their best at work.

In other words, if the employees stick to planned leave of absence and takes sick leaves only in genuine cases, then there should not be a problem with the balance between organizational needs and personal needs. However, when employees go on leave suddenly and in the middle of important projects where the deliverables are of utmost importance, it is certainly the case that the organization suffers as a result of this.

Authorized and Unauthorized Leaves

The previous section dealt with the pros and cons of planned and unplanned leaves.

If we now turn to authorized and unauthorized leaves of absence, we find that once an employee decides to absent himself or herself without informing his or her manager or supervisor, then he or she can be slotted as gone AWOL or Absent Without Official Leave which is a term that was first used in the armed forces and is now widely used in Human Resource parlance to denote those employees who have absented themselves without notice.

Indeed, contemporary organizations and the HR personnel are not taking kindly these instances as well as the managers who often report such instances and mention it in the employees’ appraisal to indicate a serious breach of discipline.

The point here is that when employees absent themselves suddenly and without authorization, the managers have to reallocate their work and find other employees to complete their tasks.

Apart from this, the managers might not be completely in the loop about the specific tasks being done by the employee who has absented himself or herself without authorization. This is because in the laissez faire work environment of the 21st century, often it is not possible for the managers to have minute details of what an employee is working on.

Moreover, when employees absent themselves suddenly, the other employees might be having their hands full and hence, it might not be possible to reallocate the tasks completely.

Absent Without Leave or AWOL

Absenteeism takes on a more dangerous turn when employees go AWOL and engage in suspicious and illegal activities which can have a bearing on the organizations as the individual in question is a part of the organization and hence, the organization bears some responsibility towards his or her actions. This is the reason why many organizations in recent years have come out with strict policies and rules and regulations that specify an outer limit for the number of days an employee can go AWOL without informing his or her manager.

In some multinationals like Fidelity, this is as short as two days because the reasoning is that in this connected and mobile age, the employee or his or her family as well as friends can contact the organization within two days if the employee is absent because of legitimate reasons like being involved in an accident, or having a personal emergency.

Further, organizations like IBM and Microsoft have call trees that can be activated in case of emergencies and procedures to activate continuity of business routines. This means that the employees have to give alternate contact numbers to their managers in the call trees so that the employee and the alternate contact can be reached in case of any serious event because of which the employee is unable to reach the manager.

Absenteeism from Trainings and Events

We have so far focused on absenteeism from work and its consequences for organizational performance. If we consider absenteeism from trainings and important events like Annual Days, All Hands Meets, and Town Halls with the senior leadership, we find that many organizations are frowning on this kind of absenteeism as well.

The contention here is that for smoother organizational communication, employees have to necessarily attend these meets and hence, absenteeism is not being tolerated here. moreover, being absent from trainings entails monetary losses for organizations as training nowadays is an expensive affair and is usually priced on a per seat basis.

Further, finding replacements at the last minute is tough for many organizations and hence, many HR managers and direct managers often make it a point to mention absenteeism from training in the overall performance assessments of the employees.

Before concluding this article, it would be pertinent to point that a balanced and objective look at absenteeism would reveal the fact that in most cases, there are legitimate reasons on both sides i.e. the employees and the organizations. Therefore, the concluding statement is that both employees and the organizations should realize their responsibilities and conduct themselves in a manner that does not lead to legal and other complications for either side.

According to latest survey findings from Accenture High Performance Report, about 85% senior executives view talent management as a major competitive differentiator for attracting and retaining skilled workforce and developing the highly talented leaders. Many Indian organizations have realized that it is the quality of people which they employ, retain and develop will ensure their business profitability and provide them a competitive advantage.

Talent management is concerned with delivering business success by understanding what an organization actually means by talent and how it can achieve the long term organizational goals. It aims at ensuring that the organizations value natural talents and understand the obstructions to an effective performance.

Talent management solution integrates the needs of the management, executives and employees into one system and unifies information across all the major HR processes like performance management, recruitment and selection, learning and development, succession planning and career development.

According to a survey report of May 2006 from the Economist Intelligence Unit (EIU) and Development Dimensions International (DDI), maximum CEO’s from across different industries globally spend their major chunk of time in recruiting, performance management, talent management, succession planning, mentoring and retention.

Talent management strategies are holistic in nature and aim at supporting such practices which improve the communication of goals and performance expectations across different levels in an organization. These strategies can be categorized into the following heads:

• Developing the existing talent pool
• Maximizing employee satisfaction
• Attracting talent visibility
• Planning in advance for succession
• Acting upon the performance reviewed

According to a report from CIPD’s 2006 learning and development survey, managing talent is not a very easy job and various factors influence the talent management strategies and policies of an organization.

The report equally highlights that about 74% of the respondents did not have a properly conceived plan for management of talent. Some of the major strategic challenges to talent management are:

• A rise in the trends of globalization in the labor market.
• An increase in the virtual workplaces.
• Diverse workforce in terms of age, race, etc.
• Educated workforce carries independent notions about their style of work and career path.

However, for many organizations talent management is a major strategic issue and they view it as a critical factor for providing them with a competitive advantage in the competitive war for talent.

Effective management of talent requires a thorough diagnosis of the employee attitudes and also the organizational culture.

The tools which help in attracting and retaining the best of talent in an organization are pay, benefits, learning and development and a proper work environment which can be group centric or individual and the benefits can be tangible or intangible.

Pay: This is the most determining factor for retaining the talent pool in an organization which should be kept competitive.

IT and ITES majors like Wipro and Infosys implement variable pay for retaining the employees and extracting the best performance from them.

Flexible benefits are another effective tool for encouraging high performers for example Eicher Group which allows its employees to design their own compensation package which suits with their needs.

Benefits: Benefits which provide social and futuristic security to the employees can serve as a major tool for retaining the best talent pool in an organization.

For example, Infosys provides a group insurance scheme to its 13,000 employees in Bangalore and is also one of the first Indian software companies for introducing Employee Stock Option Plans (ESOP). Similarly, many other Indian organizations design and develop innovative benefit packages for retaining their talent.

Learning and Development: It enables the retention of the most competent and ambitious employees in the organization and at the same time provide a competitive advantage by building the intellectual base in an organization. For example, Wipro provides ample learning opportunities to its employees for developing their leadership potential. Wipro has designed a Life Cycle Stage Development programme, which selects the employees with the leadership potential and trains them in accordance with their level in the organization.

Organizational Culture: A healthy work environment boosts the morale and spirit of the employee and strengthens the bond of relationship between the management and the employees.

Work culture is influenced by the organizational communication system, feedback mechanism and the effective implementation of recognition and rewards. Many Indian organizations have taken innovative initiatives for maximizing employee satisfaction and improving the overall organizational productivity.

Role of Top Managers in Performance Management

The top managers play a lead in the entire process by setting trends for the lower rung and acting as role models for the employees. Their responsibility is to design policies which ensure an efficient management of performance in an organization and to define and act upon the core values relating to performance.

Top management plays a vital role in convincing the line managers that performance management can be instrumental in the achievement of business goals and thus ensure that they take this aspect seriously in their work front for maximizing employee satisfaction and productivity.

Top managers are expected to develop a high performance culture in an organization by ensuring the following:

• By communicating an organization’s mission and values to its customers and employees.
• By clearly defining the work expectations and communicating to everyone for ensuring success in the achievement of business goals and facilitating an overall performance improvement.
• By keeping the employees informed about their progress towards the achievement of goals and suggesting corrective actions for non-achievement of performance.
• By establishing a shared belief amongst the employees regarding the importance of continuous improvement in performance.

A remarkable example is Infosys Technology Ltd., an international IT company and a world leader. The chairman Mr. Narayan Murthy was dedicated and committed towards an efficient management of performance of the employees for developing a vast talent pool in the organization. He considered his employees as the most powerful wealth responsible for driving the success and the future of his organization.

Mr. Narayan Murthy introduced the best reward systems in the industry for retaining the existing talent and the attracting the best from the industry. He encouraged an open communication and provided them with an opportunity to interact with the management and share ideas in meetings.

He established a Leadership Institute in Mysore for grooming the future leaders for successfully tackling the challenges of the changing markets. Similary, the management of United Parcel Service of America (UPS), selects only those people who fit into their organizational culture for efficiently managing their performance and projecting a positive image before the customers.

Role of Line Managers in Performance Management

The line managers or the front line management play a very crucial role in implementing and enacting the HR policies. Hence, it is very important for the management to ensure that the line managers possess a right attitude towards the performance management approaches and equally possess the right competencies for executing it.

The line managers mostly consider the performance management process as a mere bureaucratic chore and hence they consider it as a sheer waste of time. Some managers lack the required skills for reviewing the performance of the employees, providing feedback and identifying objectives along with them. These limitations can be overcome by adopting the following remedies:

• By providing leadership from the top.
• By communicating with the line managers about the importance of performance management in driving successful results and how it is a part of their responsibility.
• By maintaining simplicity in the overall process of performance management.
• By reducing the pressure from the line managers by making the process an ongoing one instead of an annual review.
• By involving the line managers in the design and development of the performance management processes by representing them in pilot studies.

Role of Employees in Performance Management

The employees have a vital role to play in the performance management cycle as the entire process revolves around them. They play an active part in formulating performance agreements along with their line managers and participate in 360 degree assessment schemes. They discuss their roles and the competencies required and define objectives in conjunction with their superiors. Hence, the employees should be trained in all these activities.

Role of HR in Performance Management

The HR department today is a strategic partner and plays a vital role in pursuing a particular strategy. For facing the challenges of a globalized world, Indian organizations have reformed their HRM strategies for managing the employee performance by considering part time work, outsourcing and temporary workers.

HR no longer today plays the role of a rubber stamp department, rather is a performance enabler by closely working with the to management and all the major functional departments of an organization. Companies like Maruti Udyog Ltd. and Mahindra and Mahindra, revamped their entire organizational set up and were able to create performance efficiency due to the efforts of the HR department.

Performance management is the heart of any HR processes in an organization as it influences the rest other HR functions or processes. Focus on performance management may be fruitless without the existence of proper organizational design and management systems.

Some of the essential pre requisites without which performance management system will not function effectively in an organization are:

• Should attract very high levels of participation from all the members concerned in an organization. It should be a participative process.

• Top management support and commitment is very essential for building a sound performance culture in an organization.

• Organizational vision, mission and goals should be clearly defined and understood by all levels so that the efforts are directed towards the realization of the organizational ambitions.

• Clear definition of the roles for performing a given job within the organizational framework which emanates from the departmental and the organizational objectives. The system should also be able to explain the linkages of a role with other roles.

• Open and transparent communication should prevail which will motivate the employees for participating freely and delivering high performance. Communication is an essential pre requisite for a performance management process as it clarifies the expectations and enables the parties in understanding the desired behaviors or expected results.

• Identification of major performance parameters and definition of key performance indicators.

• Consistency and fairness in application.

• A commitment towards recognition of high performance. Rewards and recognitions should be built within the framework of performance management framework.

• Proper organizational training should be provided to the staff members based on the identification of training needs from periodic evaluation and review of performance. This will motivate the employees for a superior performance.

Tata Iron and Steel Company (TISCO), a flagship company of India involved in manufacturing of cost effective steel can be appreciated for their initiatives in the implementation of an effective performance management framework and innovative HR practices.

TISCO initiated a management restructuring programme for transforming into a high performing and a growing organization. In the HR front, the management focused on providing exciting career opportunities and building a team of high performing professionals for which they hired Mckinsey and Co. The consultants firstly started with building a lean and a flat strategic business unit with enriched jobs, increased accountabilities and autonomy.

A Performance Ethic Programme (PEP) was also introduced for promoting young and dynamic professionals and this was a replacement of seniority based promotions.

A new Performance Management System (PMS) was introduced for aligning the KRA’s with the business strategies and identifying superior performers in the organization by defining clear career paths and accountabilities.

The rewards and recognitions were linked with the PMS. The new measures in the direction of performance management boosted the employee’s motivation and performance.

The job satisfaction also improved due to the introduction of a fair and transparent reward system.

This article deals with a rather sad aspect of contemporary organizational policies, yet this is an important aspect that affects all employees and the HR function in addition to the line managers.

We often hear the term involuntary separation, which means the resignation of employees after being asked to put in their papers. This happens either because the employee has not performed even to the lowest bar or standard or because the employee would have broken some cardinal rule of the organization. We shall be focusing on the first aspect in this article.

Performance Improvement Plans or programs (PIP) are monitored, structured, and result based activities wherein employees who are performing below the average demanded by the organization are expected to do better under the PIP, which is when the line managers in conjunction with the HR managers monitor the performance of the employees. Though this is an undesirable situation for the employees to find themselves in a PIP, it is a fact of life that organizations implement these PIPs for employees at all levels.

The Performance Improvement Plans/Programs (PIP) Process and the Roles of the Stakeholders

The placement of the employee in a PIP takes place after due consultation between the employee, the manager, and the HR manager. In many cases, employees are placed on watch without the PIP if their performance is deemed unsatisfactory.

Often, employees are observed for two consecutive performance cycles and if their performance does not improve or worsens, then the decision to place the employee under PIP are taken.

Many line managers are reluctant to go for PIPs straightway as once the employee is placed in a PIP; his or her performance is monitored not only by the line manager but also by the HR manager.

This means that each deliverable that the employee completes is checked for compliance with the performance standards by both the line manager and the HR manager who though does not get involved in the technicalities and subject matter, nonetheless asks for status reports from the manager and the employee.

Indeed, many organizations view the PIPs as a waste of time of all stakeholders as dramatic improvements in performance are unlikely going by the statistics.

On the other hand, organizations need a valid reason to terminate the services of employees and hence, the PIPs are designed to motivate the employee and set stern conditions for him or her so that their performance improves.

PIP and its Effect on Employees

From the employee’s perspective, PIPs are like an insult as the very basis of their work is being challenged. Many employees usually take the hint when placed on PIP or if the manager indicates such a course of action to them and resign so that the embarrassment is saved for everybody.

Indeed, it is a rather sad state of affairs if even after the PIP the employee does not ramp up on his or her performance. Of course, not all PIPs end up this way and there are many success stories shared by managers about how employees did improve their performance after being placed in the PIP.

Whatever be the outcome, the mere mention of the PIP is by itself an indication that the organization has lost trust in the employee.

Further, the issue of personal bias enters the scene as well as some managers would like to settle scores with the employees whom they do not like for whatever reason and hence, they insist on PIPs for those employees.

It needs to be remembered that this is not a common occurrence as there are many checks and balances in the organizational structure that are explicitly designed to prevent such an occurrence.

Closing Thoughts

Finally, in these economically challenging times, employees are putting in their best efforts as neither do they want themselves to be under PIPs or they try other companies because the shrinking job market has reduced the opportunities available to the employees.

Some of the crucial objectives of performance reviews are as follows:

• Performance planning
• Employee motivation and empowerment
• Learning and Development
• Acts as a two way channel for communication for discussing the roles, expectations, relationships and work problems.

Performance review meetings should focus on two major areas: Firstly on performance improvement measures and secondly, the meeting should be forward looking in nature rather than backward looking. The main problems which normally arise during the period of performance reviews are:

• Identification of performance measures and the criterions for evaluating performance.
• Problems in collection of genuine performance related evidences.
• Manager’s bias.
• Conflicts between the reviewers and the people being reviewed.
• Defensive behavior from the people under review as a response to some criticisms.

The above discussed problems can be checked by adopting the following measures:

• Ensuring that the criterions for evaluating performance covers the mutually agreed quantifiable objectives, competencies based on role analysis and properly laid performance standards.
• Monitor performance on a continuous basis throughout the year against the agreed objectives, behavioral dimensions and the performance standards.
• Adopt measures to minimize bias.
• Train managers in building positivism in the entire process and in providing constructive criticism and feedback.
• Briefing the people involved in the process regarding the benefits from this process to both the parties for reducing the defensive behaviors on the part of the employees under review.

The golden rules for conducting a performance review meeting:

• Managers should be prepared by referring to a list of objectives and their notes on performance throughout the year.
• Sufficient time should be provided for allowing a full discussion.
• Building a friendly, supportive and an informal environment.
• Providing a constructive feedback.
• Use Time productively and constructively.
• Praises should be used by the managers for some special achievements.
• The individuals should be allowed to do most of the talking.
• Self Assessments should be invited.
• Only performance related issues should be discussed and not the personality.
• Analysis of performance should be encouraged.
• End the review meeting on a positive note agreeing upon measurable objectives and a plan of action.

Guiding principles of a review meeting:

• Achievements should be discussed in relation with the objectives and the performance development plans.
• Assess the level of competence achieved by the individual which is defined in their roles.
• Assess the extent to which the individual’s behavior is in accordance with the organizational values.
• Identify the problems involved in the achievement of objectives or the performance standards and also establish the reasons for such problems.
• Discuss about the individual’s working relationships with his/her managers, colleagues and also the subordinates.
• Develop agreeable actions for resolving those problems.
• Review and revise performance standards if required.
• Develop a personal development plan and agree upon a performance plan for the next review period.

The performance management process evolved in several phases.

1. First Phase: The origin of performance management can be traced in the early 1960’s when the performance appraisal systems were in practice. During this period, Annual Confidential Reports (ACR’s) which was also known as Employee service Records were maintained for controlling the behaviors of the employees and these reports provided substantial information on the performance of the employees.

   Any negative comment or a remark in the ESR or ACR used to adversely affect the prospects of career growth of an employee. The assessments were usually done for ten traits on a five or a ten point rating scale basis. These traits were job knowledge, sincerity, dynamism, punctuality, leadership, loyalty, etc. The remarks of these reports were never communicated to the employees and strict confidentiality was maintained in the entire process. The employees used to remain in absolute darkness due to the absence of a transparent mechanism of feedback and communication. This system had suffered from many drawbacks.

2. Second Phase: This phase continued from late 1960’s till early 1970’s, and the key hallmark of this phase was that whatever adverse remarks were incorporated in the performance reports were communicated to the employees so that they could take corrective actions for overcoming such deficiencies. In this process of appraising the performance, the reviewing officer used to enjoy a discretionary power of overruling the ratings given by the reporting officer. The employees usually used to get a formal written communication on their identified areas of improvements if the rating for any specific trait used to be below 33%.

3. Third Phase: In this phase the term ACR was replaced by performance appraisal. One of the key changes that were introduced in this stage was that the employees were permitted to describe their accomplishments in the confidential performance reports. The employees were allowed to describe their accomplishments in the self appraisal forms in the end of a year. Besides inclusion of the traits in the rating scale, several new components were considered by many organizations which could measure the productivity and performance of an employee in quantifiable terms such as targets achieved, etc. Certain organizations also introduced a new section on training needs in the appraisal form. However, the confidentiality element was still being maintained and the entire process continued to be control oriented instead of being development oriented.

4. Fourth Phase: This phase started in mid 1970’s and its origin was in India as great business tycoons like Larsen & Toubro, followed by State Bank of India and many others introduced appreciable reforms in this field.

   In this phase, the appraisal process was more development driven, target based (performance based), participative and open instead of being treated as a confidential process. The system focused on performance planning, review and development of an employee by following a methodical approach.

   In the entire process, the appraisee (employee) and the reporting officer mutually decided upon the key result areas in the beginning of a year and reviewed it after every six months. In the review period various issues such as factors affecting the performance, training needs of an employee, newer targets and also the ratings were discussed with the appraisee in a collaborative environment.

   This phase was a welcoming change in the area of performance management and many organizations introduced a new HR department for taking care of the developmental issues of the organization.

5. Fifth Phase: This phase was characterized by maturity in approach of handling people’s issues. It was more performance driven and emphasis was on development, planning and improvement. Utmost importance was given to culture building, team appraisals and quality circles were established for assessing the improvement in the overall employee productivity.

The performance management system is still evolving and in the near future one may expect a far more objective and a transparent system.