08).Performance Management
Performance management is the continuous
process of improving performance by setting individual and team goals
which are aligned to the strategic goals of the organization, planning performance
to achieve the goals, reviewing and assessing progress, and developing the
knowledge, skills, and abilities of people.”
Given
the competitive global environment in which organizations operate, the need to
develop (and retain) highly skilled employees is paramount for prosperity and
survival (Crawshaw,
Van Dick, & Brodbeck, 2012). Performance management (PM) is widely
advocated as a way to develop employees (Aguinis,
2013; Cascio,
2014). Broadly speaking, PM can be defined as “identifying, measuring, and
developing the performance of individuals and teams and aligning performance
with the strategic goals of the organization” (Aguinis,
2013, pp. 2-3). This simple definition underscores the close alignment
between PM practices and Human Resource Development (HRD). This link is further
evidenced by Hamlin and Stewart’s (2011) review of the literature in
which they proposed four core purposes of HRD: “improving individual or group
effectiveness and performance”; “improving organisational effectiveness and
performance”; “developing knowledge, skills and competencies”; and “enhancing
human potential and personal growth.” (p. 211)
Regardless
of the term used, the broader PM literature has a rich history with
publications dating back to at least the 1920s (Link, 1920) with numerous literature
reviews published on the topic over the past 30 years—for example, Arvey
and Murphy (1998); Banks and Murphy (1985); DeNisi
and Smith (2014); Iqbal,
Akbar, and Budhwar (2015); and Rynes,
Gerhart, and Parks (2005). Those published over a decade ago are less
likely to be reflective of the current state of the PM literature, while
publications from 2014 onward focus upon very specific elements of PM. For
example, Iqbal
et al. (2015) concentrated on issues related to ratee reactions
while DeNisi
and Smith (2014) centered their review on the relationship between
individual employee performance and firm performance. While these influential
contributions have guided the field, they have tended to focus on the narrower
area of PA (as opposed to PM) and have largely been grounded upon extant HRM
literature, with a psychology emphasis. Within the PA literature, scholars have
traditionally argued that PA has two purposes: (a) employee motivation and
development, and (b) usage of PA results for administrative purposes such as
compensation (Latham & Wexley, 1994). This has often been referred
to as the “split roles” of PA (Meyer, Kay, & French, 1965). Many of the issues related to
evaluating performance for motivation and development purposes (e.g., ratings,
rating accuracy, rater training, psychometric properties of PA instruments,
etc.) have been the focus of industrial-organizational psychological outlets (Arvey
& Murphy, 1998; Banks & Murphy, 1985). HRD scholars have also
emphasized this first purpose, but with a heavier emphasis on goal setting,
developmental feedback, and, in particular, coaching (Ellinger,
2014; Werner, 2017). In essence, coaching in the PM
context has been defined by Werner (2017) as “ . . . a process used
to encourage employees to accept responsibility for their own performance, to
enable them to achieve and sustain superior performance, and to treat them as
partners working towards organizational goals and effectiveness” (p. 356). In
contrast, researchers in the compensation field (Lawler, 2003; Risher,
2005; Rynes
et al., 2005) have often examined the second PA purpose emphasizing the
linkage between performance and compensation, such as the choice of metric to
ground compensation decisions, the extent to which pay motivates or demotivates
employee performance, the use of forced distributions, and the many ways
compensation can be linked to pay (individual, group, stock, etc.).
Performance Management System(PMS)
PMS is as a strategic and organizational approach, which describes, evaluates, executes, and improves organizational performance constantly. It comprises of methodologies, framework, and indication that facilitate organization in the formulation of their strategy and make possible for employees to gain strategic insight, which permits them to face strategic assumptions, improve strategic thinking, and inform strategic decision-making and learning (Marr, 2006). It is seen as an integrated process in which manager work with their employees to set expectations, measure and review results, and reward performance, in order to improve employee performance, with the ultimate aim of affecting organizational success positively (Mondy et al., 2002). Simons (2000) describes PMS as ‘the formal, information based routines and procedures which are used by managers to maintain or alter patterns in organizational activities’.
In this research a standard performance management system (Armstrong, 2006, 2003) is compared with the informal PMS as applied in LDO. The performance management system is shown in Figure 1. In this standard model there are five main components; Role definition, Performance agreement (Plan), Personal development planning (Act), Performance (Monitor) and Performance review (Review)
Figure
1. Performance management system (Armstrong, 2003, 2006).
·
In Role definition Purpose of the role, Key
result areas that present the major responsibilities of the role holder in
terms of output and Key competencies in terms of qualification, skills, or
behavior required to perform the job are identified and established.
·
In the second stage of PMS, performance
agreements or contracts are established. Expectations from human resources are
ascertained, i.e. what an individual has to attain in the form of objectives,
how their performance will be measured and competences needed to deliver the
required consequences. Armstrong (2001) encompasses
elements of performance agreements or contracts as a combination of objectives
and standard of performance, Performance measures and indicators, competence
assessment and core values or operational requirements.
·
The next stage of PMS is the personal
development plan. At this stage actions are designed to develop individuals in
order to broaden their knowledge and expertise, amplify their levels of
proficiency and to advance their performance in particular area
·
Once agreements are accomplished between the
stakeholders, dynamics of the PMS have been identified and agreed upon with
mutual consensus and consultations, training have been imparted to the
concerned, and the required developmental activities identified than its time
for the actual Performance of agreed upon jobs. Actions are taken in accordance
with the practice of the performance agreement, and personal agreement plan as
individuals keep on with their daily work and their intended learning
activities; it also includes providing an uninterrupted feedback on
performance, conducting informal performance reviews, updated objectives and
dealing with performance problems and counseling (Armstrong,
2001)
·
According to Ingram and McDonnell
(1996) measuring the performance of employees is a compulsory task as it
allows a firm to have a record of current organizational activity in order to
judge their progress and help refocus strategy. This information must always be
compared against past performance and initial goals, as well as firms must also
compare their performance with other compatible firms. Deciding about the
criteria for performance measurement can be difficult, however Kaplan and
Norton developed balanced scorecard in 1996, and suggested financial measures
as well as operational measures. These may be sighted from four angles
·
01). Customer
viewpoint - measuring customer satisfaction by formal and informal methods.
·
02).Financial
perspective - measurement of s sales, profits and return on investment.
·
03).Innovation
and learning perspective - activities like the recognizing new markets, staff
development and upgrading the services.
·
04).Internal
perspective - including those activities influence customer satisfaction, for
instance teamwork and employee development, in addition to internal measures of
efficiency for example gross profit percentages (Ingram
and McDonnell, 1996).
Performance review
provides a picture of past performance and enable to make plans for future,
these reviews not only consider that what has happened in past performance year
but also emphasize on why it happened, which make future planning more
effective. This also helps to design further development and improvement plans
for employees (Armstrong, 2003)
·
Measurement: Evaluating the performance
results against pre-established expectations.
·
Feedback: Providing people with information
about their performance throughout the year.
·
Positive reinforcement: Recognizing and
appreciating the good performance of employees to ensure its repetition. This
requires constructive criticism, which leads to the way of improved performance
rather than discouragement.
·
Exchange of views: Performance review
meetings are open and frank, encourage all the involved parties to exchange
their views, which results in better decisions for future, this also ensure
involvement of all the parties in decision making which in turn lead to
commitment of employees with the achievement of goals, established with their
consent. Therefore, performance reviews are the form of dialogue not the top
down appraisal or interview.
·
Agreement on action plans: This comprises
the decisions at the beginning of next performance period, which determine that
whether the objectives will be achieved by the individuals themselves or
collaboratively by subordinate and managers.
References
·
(Aguinis H. (2013). Performance management (3rd
ed.). Boston, MA: Pearson.Google Scholar
·
Armstrong M, Baron A (1998). Performance
Management, The new realities, Inst. Personnel Dev., London.
·
Armstrong
M (2001). A handbook of human resource management practice (8 ed.), Kogan Page
Publishers.
·
Armstrong M (2003). A handbook of human resource
management practice (9 ed.), Kogan Page Publishers.
·
Crawshaw
J. R., Van Dick R., Brodbeck F. C. (2012). Opportunity, fair process and
relationship value: Career development as a driver of proactive work
behaviour. Human Resource Management Journal, 22, 4-20.Google scholar
·
Cascio W. F. (2014). Leveraging employer branding, performance
management and human resource development to enhance employee retention. Human Resource Development
International, 17, 121-128.Crossref.Google Scholar
·
Hamlin B., Stewart J. (2011). What is HRD? A definitional review
and synthesis of the HRD domain. Journal
of European Industrial Training, 35, 199-220.CrossrefGoogle Scholar
·
Arvey R., Murphy K. (1998). Performance evaluation in work settings. Annual Review of Psychology,
49, 141-168.Crossref,PubMed.ISI.Google Scholar
·
DeNisi A., Smith C. (2014). Performance appraisal, performance
management, and firm-level performance: A review, a proposed model, and new
directions for future research. The
Academy of Management Annals, 8, 127-179.Crossref.ISI,Google Scholar
·
Iqbal M. Z., Akbar S., Budhwar P. (2015). Effectiveness of
performance appraisal. International
Journal of Management Reviews, 17, 510-533.Crossref,ISI,Google Scholar
·
Ingram H, McDonnell B (1996). ‘Effective
performance management – the teamwork approach considered’, Managing Service
Quality, 6(6):38– 42 MCB University Press
·
Link H. C. (1920). The applications of psychology to
industry. Psychological
Bulletin, 17, 335-346.Crossref.Google Scholar
·
Marr B (2006). Strategic Performance Management,
1st edn, Else vier Ltd.
·
Mondy RW,
Noe RM, Premeaux SR (2002). Human resource management (8th edn), Upper Saddle
River, NJ, Prentice Hall
·
Mwita JI (2000). ‘Performance management model A
systems-based approach to public service quality’, The Int. J. Public Sector
Manage., 13(1): 19-37.
·
Rynes S. L., Gerhart B., Parks L. (2005). Personnel psychology:
Performance evaluation and pay for performance. Annual Review of Psychology,
56, 571-600.Crossref,PubMed,ISI,Google Scholar
·
qbal M. Z., Akbar S., Budhwar P. (2015). Effectiveness of
performance appraisal. International
Journal of Management Reviews, 17, 510-533.Crossref,ISI,Google Scholar