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.

 

 

 

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