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Performance management isn't just about annual reviews and awkward conversations with your boss—it's the backbone of how organizations translate strategic goals into individual accountability. You're being tested on understanding why different techniques exist, when each is most effective, and how they connect to broader HR functions like compensation, training, and employee development. These concepts appear repeatedly in exam questions about organizational effectiveness, employee motivation, and strategic HRM.
The key insight here is that performance management techniques fall into distinct categories based on their purpose: some focus on goal alignment, others on feedback mechanisms, and still others on measurement systems. Don't just memorize definitions—know what problem each technique solves and when you'd recommend one over another. That comparative thinking is exactly what FRQ prompts are looking for.
These techniques ensure individual effort connects directly to organizational strategy. The underlying principle is that employees perform better when they understand how their work contributes to bigger-picture success.
Compare: MBO vs. Balanced Scorecard—both align individual performance with organizational strategy, but MBO focuses on individual goal-setting while Balanced Scorecard provides a comprehensive organizational framework. If an FRQ asks about strategic alignment, Balanced Scorecard shows systems thinking; MBO shows manager-employee collaboration.
These techniques address how performance information flows through the organization. Effective feedback reduces blind spots and creates opportunities for real-time improvement rather than year-end surprises.
Compare: 360-Degree Feedback vs. Continuous Feedback—both expand beyond traditional top-down evaluation, but 360-degree focuses on breadth of sources while continuous feedback emphasizes frequency of communication. Strong organizations often use both together.
These techniques provide the structure for how performance is actually measured and rated. The challenge is balancing objectivity with the inherently subjective nature of human performance.
Compare: BARS vs. Traditional Performance Appraisals—both evaluate past performance, but BARS provides behavioral anchors that reduce rater bias and increase consistency across evaluators. BARS requires significant upfront development but yields more defensible ratings.
These approaches explicitly distinguish between performance levels across the workforce. The principle is that treating all performers equally fails to recognize and retain top talent while enabling underperformance.
Compare: Forced Ranking vs. Competency-Based Assessment—both differentiate performance levels, but forced ranking creates relative comparisons among employees while competency-based assessment measures against absolute standards. Forced ranking can drive competition; competency-based approaches tend to foster development focus.
| Concept | Best Examples |
|---|---|
| Strategic Alignment | MBO, Balanced Scorecard, KPIs |
| Multi-Source Input | 360-Degree Feedback, Employee Self-Evaluation |
| Ongoing Communication | Continuous Feedback |
| Structured Evaluation | Performance Appraisals, BARS |
| Skills-Based Measurement | Competency-Based Assessments |
| Talent Differentiation | Forced Ranking/Distribution |
| Reducing Rater Bias | BARS, Competency-Based Assessments |
| Development Focus | 360-Degree Feedback, Continuous Feedback, Employee Self-Evaluation |
Which two techniques would you recommend together if an organization wants to reduce subjectivity in evaluations while also identifying development needs? Explain why they complement each other.
Compare and contrast MBO and the Balanced Scorecard. When would you recommend each approach, and what organizational conditions favor one over the other?
An organization is experiencing low morale and reduced collaboration after implementing a new performance system. Which technique is most likely responsible, and what alternative approach might address the same goal with fewer negative consequences?
If an FRQ asks you to design a performance management system for a fast-paced technology startup, which techniques would you prioritize and why? Which traditional approaches might you de-emphasize?
Identify two techniques that both involve employee input in the evaluation process. How do they differ in purpose and implementation?