Rethinking Performance Management - Essay Example

? A report and reflection on Rethinking performance management ID: Table of Contents Contents Page Introduction 3 2. Performance management 3 3. Factors influencing performance 5 3.1 Role of people 5 3.2 HRM perspective 7 3.3 Leadership 8 3.4 Performance management systems 10 3.5 Branding implications 12 4. Conclusions 12 5. Reflection 13 References Appendices 1. Introduction Effective performance management refers to the continuous process of managing performance through various management activities such as planning, organising, measuring, monitoring, controlling and rewarding. These activities assist organisations to achieve their overall goals and objectives as well as sustain their existence. Strategies are formulated to execute these activities in a manner that complement each other as well as align with main organisational goals. All these processes are applied to assess organisational performance against its goals. However, performance management involves other aspects that are equally significant in achieving a holistic performance management system that truly improves and sustains organisational performance on a continuous basis. An imbalanced performance management system usually lowers performance and organisational profits as well as increase losses in the form of revenue, human capital, resources etc as pointed out by Crawford (2006) in his article, “Rethinking performance management.” This report will evaluate these factors from performance management perspective and try to identify the gaps and issues that usually lower or cause imbalance in performance output. Accordingly, an attempt to recommend suitable practices or strategies will be made after concluding with relevant findings and reflecting upon the learning gained through this experience. 2. Performance management: Performance management is the process of managing individuals and teams to achieve organisational objectives and high levels of performance in all identifiable aspects of organisational functions (Armstrong and Baron, 2004). From a definition perspective, performance management is “a continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning performance with the strategic goals of the organisation (Aguinis, 2009, p.2). This continuous process entails measurement, appraisal, monitoring, controlling, rewarding and feedback processes (Gary, 2011). Organisational goals are achieved through strategic plans, which are further executed and controlled through effective performance management systems that are applicable for managing performance of the employees, organisational systems and processes. in an ideal state, performance management system is highly beneficial for the company in terms of improving employee motivation and self-esteem; in gaining better understanding of the employees’ abilities and attitudes; achieving better job role and goal clarity; creating appropriate administrative actions; improving employees’ competencies on a continuous basis; better adherence to regulations; introducing better timely interventions to performance improvement; better execution of organisational changes; and in achieving better and predictable growth for the company (Aguinis, 2009). However, Crawford’s (2006) article critiques performance management system as a whole by highlighting that performance management related studies indicate otherwise and regard it as a flawed system because the findings from these studies show that despite managing performance, 96% organisations still experience poor performance; very few performance management systems have been proved to be effective; organisations continue to experience huge losses due to poor performance. Crawford (2006) highlighted three main reasons for the failure of performance management: firstly, the notion that performance can be managed is a myth; secondly, performance management has become more of a mechanically driven process without accounting for human factor involvement; thirdly, managers that drive and manage performance are mostly inadequately equipped with required skills as well as understanding associated with significance of people’s capability in achieving desired levels of performance. Performance management is a natural cycle that includes planning, acting, monitoring and reviewing processes in every aspect, similar to Deming’s PDCA model (Armstrong & Baron, 2004). Therefore, this natural process cannot be defined or controlled using a specific model. However, each process in this cycle can be executed in specific manner depending upon the nature of the function or activity. Different tools and techniques have been proposed by various people for each of these processes, some of which include the balanced score card (BSC), management by objectives (MBO), total quality management (TQM), benchmarking, ISO 9000, Kaizen, Six Sigma etc. However, it is important to note that these techniques are specific to certain domains. Solomon (2009) categorizes various PM models to different organisational domains (as shown in appendix 1). Whatever be the model, technique or tool, it is important to note that holistic and effective performance management is dependent on many factors. Moreover, the techniques, tools and models used in the continuous process of performance management should be strategically aligned to organisational strategies, goals and objectives in order to achieve holistic and effective performance management. 3. Factors influencing performance 3.1 Role of people: Despite highly developed and sophisticated systems, technology strategies etc, organisations can achieve their goals only through their employees’ efforts and commitment. Employees’ motivation has been rated as the most significant factor in achieving desired performance. The perspective of motivation has been explained on the basis of numerous theories in literature, some of which include the Maslow’s hierarchy of needs theory, Herzberg’s two-factor theory, McGregor’s Theory X and Theory Y, Vroom’s Expectancy theory etc. All these theories point out the factors that improve or demote employee motivation and thus commitment. A few concerns related to employee commitment that affect performance include employee skills, knowledge and attitude. Congruency between employee skills and job roles also significantly impacts performance outcomes. Considering the significance of ‘human resources,’ contemporary human resources management adopts highly developed strategies to motivate and retain their employees in order to improve and sustain performance. However, Miles (1999) opined that empirical evidences for such outcomes from the human resources model hardly exist. According to Whittington (2001), these strategies are more often framed as per environmental or external forces rather than meeting the actual needs of people (cited in Beardwell & Claydon, 2007). Cohesion of human resources management with organisational strategies is another issue commonly encountered. Human resource planning processes are adopted by organisations to ensure provision of sufficient manpower for organisation’s performance from a future point of view. Most important planning is the frontline resource planning, which would require involvement from frontline leadership with the HR team working alongside to provide required resources. However, effectiveness can be achieved in this process only if, both, leaders and HR partners are sufficiently equipped with skills required to forecast, analyse, recruit, manage, and retain the staff members (Millmore et al., 2007). 3.2 HRM perspective: The main objective of all HRM practices is efficient management of employees in order to derive efficient performance outcomes and also achieve organisational objectives. Some measures adopted in HRM include job analysis, job description, recruitment and selection, reward and recognition. Job analysis sets the path to effective performance management as well as other management functions, as depicted in appendix 2). Job descriptions help in achieving effective performance outcome, as shown in appendix 3. Bhattacharya (2011) explains that performance management is a sub-set of HRM, which facilitates employee and organisational development. All efforts in terms of job analysis, job description, recruitment and selection etc are focused towards hiring the right candidate with appropriate skills and knowledge for the role. These activities help in converting strategies to objective and measurable tasks that ultimately help in achieving desired levels of performance. Ideal job descriptions include an element of flexibility, which will help in identifying individuals with varied skills that can be applied to diversified work types. However, finding individuals with similar set of diverse skills always remains a challenge. Uniformity in terms of specific skills can be found but not individuals with similar diverse skills. For instance, job analysis that involves a variety of managerial and administrative functions requires individuals with multiple experience and skills. Various candidates hired from the market bring with them diverse experience and learning, which might match with the organisational requirement partially. Such diversity also results in varied performance outcomes. Rewards and recognition are a part of HR development. These programmes enhance employee commitment to the organisation. Worldatwork (2000) cites, ‘Through total rewards, companies are able to mold, blend, and shape a unique package that appeals specifically to the type of employees they want to attract and retain (as cited in Thompson, 2002; p.53). A total reward approach is an integrated approach that considers all possible aspects that employees value with respect to their jobs as well as their lives that are in the realm of the organisation. Hence, this approach is highly complex due to its wide-reaching implications focused towards attracting, nurturing and retaining the employees. While the total rewards system looks very attractive for employees as well as employers, designing total reward system is highly tedious, complex and sensitive issue. The entire package of total rewards does not entail all performance-related issues; however, this package does have a significant impact on the employees’ commitment and motivation towards their work and organisation. More often, all employees, performing and non-performing, reap the total rewards that are of non-financial nature; financial rewards are given as per employees’ performance. For those that are low on competence but high on commitment and are willing, non-attainment of these financial results affects their morale and thus performance. Nevertheless, providing financial rewards to all employees would also be impossible (Armstrong, 2012). This also means the concept of ‘total rewards’ is incidental most of the times; hence, anticipating higher performance and commitment because of an efficient and overarching total reward system would be inappropriate. 3.3 Leadership: The role of leadership refers to influencing others to display specific behaviours and actions that assist in achieving a specific common goal. Hence, leadership plays the most important role in driving performance at an organisation. Organisational structure usually entails a number of leadership roles at various levels, each allotted to a specific individual that displayed leadership abilities. However, leadership abilities encompass a large number of features of which the most important qualities include knowledge, understanding, communication, honesty, integrity, character, courage, creativity, enthusiasm, passion and compassion (Francis, 2007). All these qualities are required to direct, coach, monitor, and control employees as well as motivate, inspire, and encourage employees towards good performance as well as identify high and low performance; further, to change low performance to high performance. This indicates that the leadership role in performance management is a vicious circle, which would require highly experienced and efficient leaders in the roles that drive performance. A few important tasks in the leadership role are goal setting as well as achieving and sustaining employee motivation and commitment. Motivating employees is itself a highly critical and challenging task. Seijts and Latham (2005) argue that leaders need to provide greater attention to providing sources, such as knowledge and learning, to achieving goals before setting goals or expecting certain performance outcomes. Vroom’s (1964) expectancy theory of motivation asserts that leaders have the challenge to identify various motivational factors associated with the three elements, namely, expectancy, instrumentality and valence; this means, leaders need to be aware of their subordinates’ skills for specific tasks as well as the amount of psychological, material and informational support required to perform the specific task. In addition, they should also be aware of individuals’ goals and motivational needs, and strive to align these to organisational goals in order to extract maximum output and highest commitment from their subordinates (Isaac, Zerbe & Pitt, 2001). Another critical aspect involving leadership is their style that impacts employee performance. Leadership style is unique to every individual; however, management style also has an impact on the leader’s approach. Management style could be autocratic, paternalistic, democratic or laissez-faire; these styles are usually the result of organisational culture (Daft & Lane, 2009). A mismatch between management style and organisational goals usually results in low or failed performance; for instance, businesses that require innovation and creativity from employees cannot survive with an autocratic management style. Organisational strategies that are incongruent with its goals usually result in mismatch between management style and organisational culture. Secondly, leadership styles of senior management team usually reflect in organisational culture; non-conformity of management style and organisational culture to nature of the business also results in low performance. For example, participative leaders tend to include their people in critical decision-making processes and this further improves employee commitment, motivation and performance outcomes in innovative businesses. 3.4 Performance management systems: A holistic performance management is achieved with the incorporation of different performance management processes such as recruitment and selection, performance appraisals, total reward systems etc and different performance measurement techniques. A few techniques include the balanced score card system, management by objectives, benchmarking, etc. Although these processes are highly developed, they do not guarantee high or sustainable performance due to two main reasons: firstly, due to the level of their integration with organisational goals and strategies; secondly, due to the level of precision required in their implementation after integration. For their implementation, these approaches require translation of strategies to measurable objectives (Dwyer & Hopwood, 2010). Drawing lessons from literature, Coyle-Shapiro and Shore (2007) argue that performance appraisals are nothing more than a fad, which are conducted as mere organisational processes and do not really achieve any significant outcome for the employees as well as organisations. More often, these discussions lead to dissatisfied arguments and agreements. Misunderstandings and misinterpretations are the common causes due to underlying relationship issues between employees and their supervisors/managers. Rewards following performance appraisals are given in the form of performance-related pay hikes. However, this process is subject to many errors, stereotyping, and inappropriate dealing with employees (Daft, 2011). Due to these deficiencies in the performance appraisal system, employee motivation is further shaken leading to lower or average performance. Sustaining and improving performance levels significantly impacts organisation’s overall status and profits. Performance needs to be managed differently for different outcomes. For instance, high performance should be sustained by motivating high performers through skill enhancement trainings, additional responsibilities, growth and promotions, learning and monetary incentives, bonuses, recognition, appreciation etc. Mediocre performance would require constant monitoring, coaching and encouragement from leaders to improve confidence of average performers. These performers should be given additional training and support, coaching sessions, regular feedback etc. Low performers need the most attention and have to be handled sensitively. Reasons and indicators of low performance need to be identified, which usually surface in the form of higher absenteeism, not meeting targets, poor interpersonal relationships and poor teamwork, lack of communication skills etc. Such individuals need to be identified regularly by the leaders and should be trained as per requirement. As Welch notes, these individuals need special attention from leaders and supervisors in order to improve their skills and attitudes. An effective and formal performance improvement plan can be a great tool to improve performance along with appropriate support (Eisaguirre, 2009). 3.5 Branding implications: Branding activities are meant to reinforce organisational value for its internal and external entities; it also aids in promising positive futuristic outcomes. For employees, brand value is established and sustained through standards that identify the corporate reputation, which in turn helps in attracting and retaining the best talent in the market. However, these standards, regarded with importance similar to regulations, are often forcefully thrusted upon employees and are forcefully followed by employees. As the branding practices are usually focused on enhancing organisational value, these practices hardly include elements that all employees would welcome. According to Hochschild (1983), branding practices usually attempt to provide monetary and reputational advantages in exchange of employees’ emotions (Warhurst & Nickson, 2009). Such attempts to motivate employees are short-lived and their commitment eventually deteriorates, which makes employees become indifferent to company’s policies and procedures. These consequences of branding attempts would naturally affect employee performance as well as commitment. 4. Conclusions: All instances of low performance, missing targets, and losses incurred by organisations can be attributed to ineffective performance management, as noted by Crawford. Overall, this review indicates that performance management is a multidimensional process and requires a comprehensive approach that spans from organisational strategy making to employee retention, and not limited to performance management systems and procedures. All factors including leadership and employee management, organisational systems and policies, total reward systems, and performance management approach significantly impact performance outcomes. All these factors should not only focus on deriving optimum performance outcomes but also on enhancing employee motivation and commitment in a manner that reflects on their performance. 5.Reflection: There is every reason to believe in Crawford’s analysis about performance in organisations. Achieving desired levels of performance is not only dependent upon employees’ efforts and the methods to derive and monitor these efforts, but also cover various other organisational factors. These various factors that directly or indirectly affect employee performance provide enough insight into reasons for low performance, as highlighted by Crawford (2006) in his article. Crawford’s (2006) analysis highlights three main issues, which include, the approach to managing performance, dysfunctional approach to performance by relying on mechanistic procedures, and managers’ inability to manage performance. All these issues are identifiable in the review undertaken through various findings undertaken in this report. Drawing lessons from these findings, it would be better to view performance management from multiple dimensions, instead of limiting our understanding associated with achievement of higher performance only to performance measurement, appraisals and feedback activities. For an organisation to achieve and sustain high performance, it is equally important to implement organisational policies, procedures and practices in a manner that enhance overall employee motivation and commitment. Firstly, congruency of organisational strategies with organisational goals along with strong integration would be required. Secondly, leadership that drives performance at various levels must be efficient in their leading and managing abilities. Thirdly, organisational culture should be supportive of implementing strategies through appropriate organisational structure, systems and leadership style. For instance, a business that requires innovation should facilitate employee participation at all levels through support and encouragement from leadership; elements of total rewards should conform to attributes that encourage appropriate employee behaviour and improves employee involvement and motivation towards innovation and creativity. Organisational systems and structure should also be supportive of these behaviours; a few of such practices include flat hierarchy with good incentives, monetary and otherwise, effective knowledge management practices, employee retention practices, etc. Corporate regulations meant for internal branding and reputation should be less stringent on controlling employee behaviour, and within common human relations perspective. Effective managerial training on conducting performance appraisals, performance measurement, and review and feedback mechanisms should be incorporated as ongoing activities at all managerial levels periodically. These training activities should emphasize performance appraisals as performance improvement opportunities rather than opportunities to reprimand low performance. Finally, besides aligning their strategies to their goals, organisations should also focus on formulating practices and policies that not only conform to their strategies but also be flexible enough to incorporate demands as posed by changing environmental and external factors. For instance, performance sustenance is greatly dependent on employee retention and employee retention in situations threatened by competitors would require changes in total reward systems in addition to leadership role. In my opinion, the main factor that could significantly contribute to effective performance management is leadership at all levels. At the top, leadership could influence organisational strategies, culture, and management style; at the middle level, leadership has a significant role in implementing strategies and in goal-setting as well as facilitating performance management; at lower management levels, the frontline leadership has a significant role in driving and achieving desired performance from their subordinates by conducting effective performance reviews, coaching, mentoring, and feedback mechanisms. All other factors including organisational systems, HRM practices, culture, structure, performance management, branding, etc can be efficiently implemented and managed through the right leadership at all levels. References Aguinis, H. (2009). Performance management. 2nd edn. New Jersey: Pearson Education Armstrong, M. (2012). Armstrong's handbook of human resource management practice. 12th edn. London: Kogan Page. Armstrong, M. & Baron, A. (2004) Managing performance: Performance management in action. 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APPENDICES Appendix 1 Source adapted from Solomon, (2009). Select a performance management system. p.5. Appendix 2. Source adapted from Sison (1981; p.21) Appendix 3 Source adapted from Bhattacharyya, 2011; p.6. Read More