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Performance Management and Balanced Scorecard

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on 30 January 2014

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Transcript of Performance Management and Balanced Scorecard

Disadvantages/Dangers of Poorly Implemented PM Systems
-Perspective of employees: increase motivation, help improve performance, clarify job tasks and duties ...
-Perspective of managers: gain insight about employees,help them to communicate organizational goals more clearly,help drive organizational change ...
-Perspective of the HR function: provides protection from litigation.

Poorly Designed
Aims and Role of PM Systems
Definition of Reward Systems
Tangible Returns:

Include cash compensation and benefits.

Intangible Returns:

Include recognition and status, employment security, challenging work and learning opportunities.

1. Performance Management and Reward Systems in Context
Definition of Performance Management (PM)
Performance management
is a continuous process of identifying, measuring and
developing performance in organizations by linking each i
performance and objectives to the
overall mission and goals.

Characteristics of an Ideal PM System
 Congruent with strategy
 Thorough
 Specific
 Practical
 Meaningful
 Able to identify effective and ineffective performance

Strategic Purpose
Administrative Purpose
Information Purpose
Developmental Purpose
Organizational Maintenance Purpose
Documentation Purpose

Integration with Other Personnel and
Development Activities
A performance management system is the key factor determining whether an organization
can manage its human resources and talent effectively.
Performance Management Process
Ongoing process:
Performance planning
Performance execution
Performance assessment
Performance review
Performance renewal and reconstructing
Job analysis

a) Prerequisites
a need to have good knowledge of the organisation’s mission
a need to have good knowledge of the job in question
b) Performance planning
Performance planning
c) Performance execution
This component is identical to the performance planning stage.
Uses information gathered during the review period to make adjustments as needed.
some new key accountabilities and competencies may be included, or some goals may have to be adjusted either upwards or downwards.
d) Performance assessment
Employee performance:
Involvement of the employee in the process increases his or her ownership and commitment to the system.
Important information
to be discussed during the
performance review
In the absence of self-appraisals, it is often not clear to supervisors whether employees have a real understanding of what is expected of them.
e) Performance review
This is when the employee and manager meet to discuss employee performance -->
the appraisalmeeting.

An effective appraisal meeting also focuses on the present and the future.
The present
The future
f) Performance renewal and recontracting.
consideration of results and behaviour
description of areas that need improving and goals
for performance
Important responsibilities:
observing and documenting performance
updating the employee on any changes in the goals of the organisation
providing resources
Definition and Purposes of Strategic Planning
Defining the organisation’s present and future identity.

Serve as a blueprint.

Analyzing the environment.

Creating a culture of cooperation
Process of Linking Performance Management to the Strategic Plan
1st Step:
Process of Linking Performance Management to the Strategic Plan
Write a mission statement
Process of Linking Performance Management to the Strategic Plan
Vision statement
3rd Step
Building Support
Job descriptions
Missions and visions
Primary tool
3. Performance Management and Strategic Planning
Environmental analysis

Internal trends
: strengths or weaknesses
External trends
: opportunities or threats
2nd Step:
Products and services offered
Customers served
Technology used.
Values and beliefs
Bound by timeline
Process of Linking Performance Management to the Strategic Plan
4th Step:
Generate specific goals.
More specific information
Goals span a 5-year period
Process of Linking Performance Management to the Strategic Plan
communication plan
appeals process: to help

Communication plan
• What PM is and how PM systems have been implemented in other organizations
• How PM fits with the organizational strategy;
• Tangible benefits of PM system for all parties involved;
• How the system works, including the various steps in the process;
• The roles and responsibilities of each organizational member;
• How PM relates to other initiatives and programs such as training, promotion, and compensation.

The appeals process
Employee filing an appeal
HR department as a mediator.
Level 1 appeal.

Level 2 appeal.
- Intentional:
motivation is the key to minimize

- Unintentional

Training Programmes for the Acquisition of Required Skills
- Rater error training (RET)
- Frame of reference (FOR)
- Behavioural observation (BO)
- Self-leadership (SL)

Pilot Testing
It allows for the discovery of potential problems and defects and provides the ability to fix them before the system is put in place.
PTconsists of rolling out the entire system, including:
- all of its components
- results are not recorded in employees’ records.
Representative group

Ongoing Monitoring and Evaluation
When the system is implemented -->
- confidential employee surveys assessing perceptions
- attitudes about the system
- number of individuals evaluated
- distribution of performance ratings
- quality of performance information gathered
- quality of performance discussion meetings
- user satisfaction with the system
- overall cost/benefit ratio
- unit level performance indicators.

Taken together, these indicators form a powerful tool to demonstrate the value-added of the performance management system.

4. Implementing a Performance Management System
- gain system buy-in,
- training programmers for raters
- minimize errors in performance ratings,
- pilot testing the system to allow
for revisions and changes
(a) similar to me,
(b) contrast,
(c) halo,
(d) primacy,
(e) recency,
(f) negativity,
(h) first impression,
(i) spillover, and
(j) stereotype.
Can be minimised by implementing
rater training programmes.
5th Step:
Identify strategies
Game plans.
Coaching Styles
Coaching Process
Coaching Process
Performance Management Skills
Coaching is an ongoing process in which the manager directs, motivates and rewards employee behavior.
Key functions
Coaching functions:
Communicating effectively
Motivating employees
Giving feedback
Personality and behavioral preferences determine the coaching style:
To be drivers
To be persuaders
Amiable style
To be analyzers
Setting development goals
Identifying resources and strategies needed.
Implementing strategies
Observing and documenting development behaviours
Giving feedback
Observing and documenting development behaviours
Coaching Process
Negative feedback.
Review Meetings
Formal meetings
Minimize defensiveness
System inauguration


Classical performance review
Merit/Salary review

Development plan

Objective setting
Explanation of the purpose of the meeting
Self appraisal
Discussing supervisor’s performance ratings and rationale, and solving discrepancies with self-appraisal
Development discussion
Employee summary
Rewards discussion
Setting follow-up meeting
Approval and appeals process discussion
Final recap.
Establish and maintain rapport
Be empathetic
Observe verbal and non-verbal cues
Minimize threats
Encourage employee participation.
Performance Management
History and Development
Using the Balanced Scorecard
Balanced Scorecard
The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.
By 1993 Norton (with some others) had formed Renaissance Solutions with the intention of using the balanced scorecard as a vehicle to help companies translate and implement strategy. “Translating strategy into action” was the tag line to the first balanced scorecard book.
They decided it would help to expand an organisation’s scorecard to be organised around four perspectives.

The balanced scorecard was founded back by Robert Kaplan and David Norton

Added non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance.

They published the "new" balanced scorecard Harvard Business Review paper in Januari 1992.

This transforms an organization’s strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis.
Four Perspectives
The Learning & Growth Perspective
This perspective includes employee training and cultural attitudes related to both individual and corporate self-improvement.
The Customer Perspective
Businesses are realizing more and more the importance of customer focus and customer satisfaction in any business.
The Financial Perspective
The Business Process Perspective
This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is doing, and if its products and services conform to customer requirements.
Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it.
The balanced scorecard is not a piece of software, it can only help a organization with implementing it.


http://www.bizzdesign.com/assets/BlogDocuments-2/20130711_Busienss-Performance-Management Balanced-Scorecards-and-The-Decision-Model/Decision-modeling-balanced-scorecard.jpg








1. Performance Management and Reward Systems in Context
2. Performance Management Process
3. Performance Management and Strategic Planning
4. Implementing a Performance Management System
5.Performance Management Skills
6. Balanced Scorecard

Many organizations have only
performance appraisal
systems. Performance appraisal emphasises the assessment of an employee’s strengths and weaknesses, and does not include strategic
business considerations.
Performance Management and Balanced Scorecard
Alejandra Monterrey Perera
Jules Nijskens
Ana Cristina Vargas Medina
2. Performance Management Process
Strategic plan
Full transcript