Performance and Reward Management System Guidance

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Introduction of a New Performance Management System

Purposes of performance management

Performance management is a continuous process established by organisations to help them in achieving their objectives. Its achievement is through maximisation of individual employee, a team or the entire organisation.

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Purpose of performance management and their relation to business objectives include

  1. To enable employees to be focused and achieve the company’s business plan and objectives
  2. To enable individuals to attain self actualisation, and strengthen the employee in line with achieving the company’s objectives
  3. To enable the establishment to reward individuals based on their contributions towards achieving organisational objectives.

Achievements of business objectives are an important survival goal for an organisation. For accomplishment of business performance, objectives need to be established and explained by the upper management. After sharing the objectives, they should be measured, appraised, monitored and actions taken. However, the performance and management process involves the entire business objectives evolution from its inception until its end. For an organisation to increase the strength of the employees, they have to measure it.

The process sets specific goals that need to be accomplished in a certain period. The capability of the employees is improved through motivation and rewarding hard work. For an organisation to retain motivated workers and achieve high performance there should be development programs which has motivational reward strategies and challenging work; this will enhance career development and progressive job satisfaction. This management process is usually developed to help employees understand what they need to learn and how they need to learn. Workers are supposed to be in continuous growth and learning. Well informed workers deliver high quality work leading to improved performance of the organisation. The extent of skills, employees’ behaviours and knowledge are critical to the organisation’s ability to execute its business activities

Components of Performance Management System

  1. Review of achievements; These achievements should be measured against the set work goals and development goals
  2. Goals for the next 12 months; goals set should be (SMART) specific, measurable in certain units, should be achievable, results oriented and should account for time
  3. Professional learning needs; this involves identification of individual employee learning needs for the next business period
  4. Career development plan involved; due to the changing technology and customers requirements, on the job training is important since it keeps an employee abreast of the changing technological environment.

Maslow’s Theory of Needs

When it comes to managing performance, what must be understood is that based on Maslow’s theory of needs the motivation of employees tends to change over time and, as a direct result, it would be necessary to for the company to change its method of performance management along with these shifting needs. For example, Maslow states that once basic needs are met people tend to move onto satisfying other needs which are their motivating factors. In the case of corporate jobs this means that employees move on from wanting a job to developing a career. For example, various studies which have examined Generation Y employees have discovered that a focus on career development and fast promotion are the main motivating factors behind Gen Y workers continuing to be with a company. This is in stark contrast to Generation X and the Baby Boomer generation whose higher needs focused on benefits and being with a company for an extended period of time. It is based on this that companies need to examine what are the main motivating factors within new generations of workers and adjust their interal policies and operations accordingly in order to not only attract competent workers but to maintain them as well.

Herzberg Factor Theory

Factor theory by Herzberg differs slightly from the initial concept conceived by Maslow wherein instead of just motivators Herzberg advocates that companies should implement satisfiers in order to both retain employees and have them work better. In the case of managing performance, Factor theory comes into play as the basis by which companies create policies that enable an employee to feel satisfied at their job while at the same time makes them want to work harder. Motivating factors in this particular case which encourage higher performance can come in the form of performance based incentives at work, giving employees a more diversified job role in order to remove boredom and complacency as well as implementing some method of having them see the “big picture” wherein they feel that their work is important and contributes significantly to the greater whole of the company. In the case of satisfaction, it is often the case that companies need to employ various types of job benefits, reducing work based stressors as well as creating management policies that encourage rather than discourage employees. Should such factors be put in place according to Herzberg, then it is likely that employees would work harder and be more likely to stay longer with the company.

Vroom Expectancy Theory

On the other end of the spectrum is Vroom’s expectancy theory which has the fundamental belief that people’s behaviour is shaped by a conscious choice. In the case of managing performance within a company, this comes in the form of an approach that states that employees can be motivated to work harder and better for the company is if there is a sufficient positive correlation between the effort they put into the work done and reward they are given. Interpretations of the Vroom expectancy theory within the current corporate landscape have come in the form of performance based incentives utilizing metrics. Metrics can be defined as a certain set of parameters that judge the performance of an employee based on a predetermined level of ideal performance set by the company. As such, motivation practices utilizing metrics usually come in the form of significant bonuses for hard work and, as seen in the call centre industry, fast promotions based on the level of performance as determined by metrics. The advantage of this particular system is that rewards and promotions are no longer a vague and shadowy system that employees are no longer aware of, rather, they are able to measure their performance and can expect a certain level of reward based on how they have performed. This is one of the current prevailing systems within many companies at the present which utilize expectancy theory as a means of shaping human behaviour in order to increase motivation and, as a result, an employee’s performance.

The relationship between motivation and performance management

The relationship between motivation and performance management is very clear. High motivation will lead to better performance, so this is a very important component of an organisation. The motives of behaving in a particular way are many and varied. Whether a person is left behind at work to finish a report for his or her manager, will depend on various variables: the predication as to what will happen if the report was not finished that day; what arrangements has the employee made at home for being late, and many other reasons. E.L Thorndike explains this in his theory of reinforcement.

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Two Motivational Theories

Reinforcement Theory

E.L Thorndike’s law describes the relationship between behaviour and outcome. The theory concentrates on improving employee’s on the job behaviour through the appropriate use of positive reinforcement raising their pay or job promotion as a reward for a positive behaviour. The management can also choose to ignore either a positive or negative behaviour; this should only be used on temporally basis. Punishment and threat can also be done for those with bad behaviours.

Goal Setting Theory

Edwin Locke introduced this theory in the late 1960s. In this theory, Edwin encourages managers to involve employee in setting goals of the organisation. This makes an individual to fell that they are so important to the organisation and they are part of running the institution. After every financial year, employees need to get feedback on their achievements and compare them with the set target to assess their performance. Employees must be committed to the goal and believe that they are capable of performing tasks

Factors to be Considered When Managing Performance

The following factors should be put into consideration when managing employees’ performance:

  1. To achieve organisational objective, there must be openness between the individual employee and the manager.
  2. The Managers and employees should both have the necessary skills to be able to use the process properly for mutual benefit.
  3. There should be objectivity in forming and communicating judgements.
  4. Also, all the managers should have the necessary training on performance management and appraisal process.

Guidance note on a performance management system for a staff handbook

Purposes of reward within a performance management system

The main purposes of rewarding employees within a performance management system are; to increase the retention rate, to motivate key employees and minimize turn over. It is well known that people are the most valued asset in an organisation; For example, in the company where I work, The manager’s award is an extra short term reward, that is given to outstanding employees that performed well by achieving set goals and objectives in given financial period.

Components of a total reward system

The concept of a total reward system is considered to be a set of policies/tools that enable an HR manager to attract, motivate and retain workers for the company.. From the employee view point, the total a reward is everything that he or she perceives to be of great value resulting from the employment. The reward covers both financial and non financial pay to show appreciation. The components of a total reward system are:-


Is an important component of the reward system that entails: basic payment system (this is annual or monthly salary rate) and payments that vary depending on task or incentives pay systems ( an increase in sales commissions and payment made depending on skills possessed)


Are used as a supplement to the cash compensation that the employees receive and are meant to protect employees and the family from financial uncertainties. Examples of this benefits: social insurance, life insurance, retirement plan, medical care insurance, favourable savings scheme, paid gym membership, breaks, holidays provided by the company, and vacations.

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Performance and recognition

Performance can be considered an integral aspect of a company’s organizational objectives since it relates to how the efforts of both teams and individuals are organized in order to achieve the goals and objectives of the company within its competitive market. The recognition motivates the employees by raising their self esteem, by giving special attention to their action, hard work, behaviour and performance. Recognition programs acknowledge and appreciate the employee’s efforts immediately after the task has been completed. Recognition can be material provision or verbal appreciation in conferences or seminars where there is important board of management, trophies or certificates. It can also be in the form of financial provision.

Development and career opportunity

Include providing learning opportunities (e.g. on the job training, workshops and seminars and conferences attendance, collaborating with corporate universities for employees training needs, self developed techniques, and creating opportunities for employees to learn new technologies. Also, provide coaching or mentoring (e.g. trainings on leadership, formal and informal mentoring systems, association memberships, and exposure (Richard 2007)

Sources of data to an organisation

Many factors of performance information sources from various points increases objectivity and ensures all factors affecting utilization are put into consideration. Information like sales reports deadline and call reports are used by an organisation in performance management: feedback from others, data of any external environment, outcomes of personal observation, documentation of ongoing conversations. Many reviews also include an employee self assessment. Some of the other items that help to define the performance objectives of the company are the following:

  1. Past and current performance appraisals within the organization
  2. Departmental and organizational objectives which focus on attaining the operational goals of the company
  3. Lastly, established standards related to career goals for employees.

It should be noted though that various organizations are more predisposed towards the use a 360° feedback process in order to get the necessary information they want from their employees. Utilizing a process of self -evaluation, various employees within the company are required to contribute their feedback on various identified areas. It is usually the case that the collected responses are based on a set of evaluative metrics with the outcomes compared to self-evaluation conducted by the employees. On the other hand, it is also necessary to implement some means of external feedback in order to determine the performance levels of the company and its employees. One of the methods of doing so is to utilize customer surveys that are given out randomly during the provision of particular services or the sale of certain products.

Customers are usually more than happy to provide some means of evaluation and, as such, it can be expected that customer surveys can help to determine whether the company or its employees need to improve in some specific way. Other methods of external feedback come in the form of annual surveys and examinations conducted by market research companies. Surveys conducted by companies such as J.D. Powers enables companies to evaluate their performance and that of their employees against that of other companies within the same market. Through such external methods of evaluation companies are better able to gauge their performance and determine what needs to be done in order to become more competitive within their respective markets.

A performance review meeting

The frequency and purpose of performance review in human resource management

Performance management of an institution review process usually works to an annual cycle which entails employee’s performance reviews that are to be conducted annually using upward assessment with the business planning and budgetary process, full time faculty, managerial staff, administration, and classified staff. All the operational components of the organization are shaped to ensure success.

Apart from the above, reviews may be done at the discretion of the immediate supervisor as in the circumstances given below;

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  1. In case of new employees following a 30day introductory period and anytime through the one year probationary period.
  2. Transfer – workers transferring to another position if he or she only has a 90day period in the new position.
  3. In case of an Employee working under a new supervisor following a 90day period.
  4. Review will also be done on Employees in a performance improvement plan or a positive disciplinary program.
  5. In case of any request of an employee.

The yearly performance review process enables a worker to do self-appraisal on their performance. The supervisor and the supervisee will personally complete a form before to jointly meeting to complete the evaluation process. In the evaluation meeting, the employee and supervisor will compare their assessment and address any differences in their evaluation. Only the final assessment form is submitted to the Human Resources manager.

The importance of the upward performance assessment is self improvement and development. The Upward Performance Assessment Forms shall be distributed and annually be field on each supervisor by their supervisees. The Human Resources Office distributes the appropriate forms, gathers the information given by the supervisor’s subordinates, and provides a summarized copy to the supervisor and their supervisor. The final copy of the assessment form is retained in the supervisor’s confidential file in the Human Resources Office for a period of 3 years. The individual copies of upward performance assessment are destroyed after the assessment is complete.

Evaluation is to be done by the Supervisors using standardized evaluation forms approved by the Human Resources management team. This should be done basing final judgement on the category of the employee being evaluated. Employee’s current position and contribution to the company shall be evaluated and reviewed by the employee and supervisor. Any required updates or changes to the position description shall be forwarded to the Human Resources Office for correction. In the real sense, the system works through a three-stage procedure annually, beginning and ending in January to correspond to business financial and reporting year.

Stage one

This is the first phase which is January; it involves employees’ achievements of objectives as agreed upon, personal skills development and occupational standards with their supervisor.

Stage two

The second phase takes place in a progressive process aimed at keeping work agreement updated on established target, and in line with the changing environment that an organisation operates.

Stage three

This is the review done at the end of the year of individual employees. It greatly depends on the individualistic success and achievement within the period of study. Conclusions are made basing on the set goals and objectives for individuals. Decisions on rewards, promotions, demotions, development and career progression are done here. Once the system is in use, stage one and stage three should be run together.

The outcomes of the performance review meeting

This was not just an easy task; I found it very challenging to put in practice theories learnt in the previous modules being used in reviewing. When it came to mentoring and coaching of lowly motivated workers a lot of input and background knowledge was required. The performance review meeting, helped to put in practice what was learned in the earlier modules. A good performance review can be of important use to the person that is well upraised and for the organization, but it requires many preparations to avoid unnecessary mistakes. For a person to conduct the performance review well, they have to prepare themselves in advance and do extensive research regarding performance review.

It is observed that after a review is started someone needs to first know the process, and explain this process to the appraised persons. It is required that enough attention is given to appraised staff, give quality time, enough support, and finally be open and honest. This qualities and attitudes are fundamental for operations of the institution under study. This can only help in bringing out what is the best in that particular person. A personnel manager should try as much as possible to offer a positive response, even though the person did not do well in accomplishing the objectives; this will help to keep the employee motivated. Motivation ensures success in the organization through the desire and morale to excel in their jobs. It is also observed that, performance management review is not only outdated, but it is also required for the future.

Performance Appraisal Form

Employee Name: Mr. A

Employment start date: 12/10/1998

Job title: Financial Manager

Department: Accounts Department

Review date:

Review period start: 10.00

Review period end: 12.00

Last review date: 12/10/2011

Reviewer name:

Reviewer title: Human Resource Manager

Performance appraisal form for Mr. A

Competencies/Skills Notes/Comments on Competency Areas and Suggestions for Improvement
(optional but strongly encouraged)
  • Outstanding
  • Above Expectations
  • Meets Expectations
  • Below Expectations
  • Needs Improvement
Financial Acumen: Demonstrates knowledge of and effectively implements GAAP; demonstrates knowledge of and effectively implements internal finance/accounting policies and procedures; meets university deadlines. When it comes to financial control Ahmed is very competent through application of various on job training. He has the need to undergo improved training basically on accounting issues so as to avoid the errors he experiences presently. Meets expectations
Business Knowledge and communication: Demonstrates and understanding of the department’s mission as well as the departments short term goals within the next few weeks. Understands the proper application of proper financial planning. Has developed a sufficient understanding of the roles of various members of the central staff within the company and adequately provides for the company’s needs regarding efficient financial reporting. Properly contributes to the various university work groups that are a part of the company’s operational strategy in order to further develop and enhance the company’s business practices and policies within its market The calculations done by Ahmed are accurate and he with the in cooperation of comprehensive understanding of the visions and objectives of the company.
However, he has the need for further training in relation to financial management and reporting.
Improvement of the needs
Oracle, SIS systems ,human resources and payroll management:
Possesses the ability to succinctly understand the various related program/ process changes that occur within the unit and is able to effectively review and assesses the programs that have been implemented as to whether or not they are effective.
Due to the competence and knowledge he posses ,he has the ability to combine the knowledge required for paying the workers on time. Outstanding
Developing Self:due to hard work and competence he has developed ideas and trainings to apply software and application skills supporting his duties comprehensively. Ahmed works so hard in improving his skills especially on accounting software Outstanding

Future development needs.

Area for Growth and Development Importance Related Competencies
Ahmed needs to improve on face to face communication with staff and avoid being emotional when it comes to official matters. The knowledge and acquired skills move a great distance in enabling the organization to better manage its resources. It has application in both the human resource and other assets of the institution. Communication,
Teamwork and Collaboration
True Partner Focus


Translate Areas for Growth and Development into Goals Consideration if the trainings are translatable into goals of the organization.

Goals Milestones (smaller steps required to
meet the overall goal)
Measurement Time Frame
Place a distinct emphasis on personal communication wherein respectful language and proper business mannerisms are implemented. Utilization of alternative methods of conflict resolution aside from email. On a daily basis try to talk to a person face to face instead of through the email or on the phone in order to clear up any misunderstandings or miscommunications. In instances where the other party utilizes a phone or email to communicate attempt to talk to them face to face. Feedback and
Now – ongoing
Check in Date:10/11/2012
Develop the ability to identify the high
level opportunities and focus time and attention on these prospects.
On monthly basis observation On-going

Appraisee feedback

Based on the appraisee feedback, it was determined that while I was direct and succinct in evaluating the appraisee based on performance and growth and development, it was determined that my feedback and interviewing skills needed significant improvement when it comes to proper empathy regarding the situation of the one being appraised. The overall level of directness coupled with a distinct focus on the necessity for improvement was stated as somewhat condescending and in need of improvement in terms of developing better conversational skills and phrasing the need for improvement in such a way that it does not seem to be overly dramatic or harsh.

Continuous personal development plan CDP

This is a continuous personal development plan based on conducting the appraisal interview, it highlights areas where improvement needs to be undertaken and the means by which this can be accomplished.

Developing my Appraisal Skills

Based on the feedback given, I plan to improve my appraisal skills by not only reading various instructions and text on proper face to face conversations, but I will also endeavour to try to join various classes that focus on developing proper business speech. While somewhat pricey, I believe that these classes should help me immensely in developing my oratory skills to the extent that it should help me overcome the identified short-comings.

  • Readily pitches in where needed, Sees the system/big picture,
  • Learns new technologies and systems quickly.
  • Not afraid of new technology or Components
  • Overly direct
  • In need of better empathy
  • Needs to phrase things in a better way
Growth/Development Opportunities
  • Motivational development
  • Overall development
What needs to be done; theneeds are applicable and do not require much inputs and the operator is in a position to handle the issues with ease. There is the need for wide practice on the presentation of the issues

Based on the CPD it can be seen that a significant level of improvement needs to be put in place in relation to the general way in which the appraiser approaches interviews. More emphasis needs to be placed in empathy and relatedness and, as such, this can only be accomplished through constant practice as well as reviewing various materials related to developing proper interviewing skills.

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