Performance Management, Emotional Intelligence and Its Strategic Importance in HRM - Essay Example

? Performance Management, Emotional Intelligence and Its Strategic Importance in HRM Introduction Performance management is a human resources management tool used to implement employee appraisal and development (Goleman, Boyatzis and McKee2002). With employees in several organisations complaining of flawed performance management systems lacking clear performance goals, honest feedback and unable to innovatively exploit the available technology, this essay explores the concept of Performance management in a profound and authoritative manner. It seeks to answer the question of how an effective performance management system can be implemented to maximise employee productivity and development (Shaw 1995). Emotional intelligence is increasingly finding its place in the corporate or organisational structure. This is because it provides a new way to understand and assess people’s behaviour, management style, attitudes, interpersonal skills and potential. This essay will also unravel the forms of emotional intelligence and how they can be employed by HR professionals in planning, job profiling, recruitment, and customer relations. Performance management and its strategic importance in HRM Performance management is maximising individual or/team performance to achieve a motivated workforce ready to scale the highest heights resulting in high quality output (Goleman, Boyatzis and McKee2002). Performance management is an essential tool for top performing organisations and organisations aiming for the top. Ideally, a performance management system should be designed to suit the needs of a particular organisation. It should support pay, promotion, employee development, recruitment and reduction in force within the hierarchy system. Overloading the system with too many objectives will make it choke and lose focus. The choice of a performance management system should be determined by the business needs, organisational culture, and its integration with other human resources management systems. For example, it is recommended that an organisation should devise distinct systems of performance management for decision making and performance management for employee development to avoid conflict of interest. A performance management system for decision making uses appraisal information as a basis for pay increment, promotions, transfers, reduction in force or any other administrative human resource decision (Goleman, Boyatzis and McKee2002). On the other hand, a performance management system for development uses appraisal information as a guide in training, job experience and capacity, mentoring or any other employee development activity aimed at improving employee productivity. This is especially the case in employee rating as different rating systems grade the employee differently depending on the system. Generally, ratings for decision making are more lenient compared to ratings for development which vary with employee strength and development needs. Further illustration of the disparity in the two systems is reflected during evaluation of employees ratings in order to make reward decisions, where individual employees are supposed to give development feedback, they tend to be reticent to discuss their development needs so as not to jeopardise potential rewards and opportunities (Condly and Stolovitch 2003). An effective performance management system should have a well articulated process for accomplishing evaluation activities with well defined timelines for managers and employees, and all employees should be treated in a fair and equitable manner. The main stages of a performance management system are a revolving mechanism of performance planning, ongoing feedback, employee input, performance evaluation and performance review. At the beginning of a performance management cycle, employee performance expectations should be reviewed with a focus on their behaviour and what are expected to deliver in the next cycle. Behaviour reflects how an employee does a job. The focus is on teamwork, communication, mentorship, camaraderie among others. For example, some employees deliver exceptional results but are uncooperative, sulky and disruptive while others are amicable, supportive, considerate, and interpersonally effective but fail to achieve important results (Shaw 1995). Behavioral and results performance should be core to an organisations strategy and corporate aspirations. A well executed performance management system drives employees to engage in behaviours and aim for results that facilitate the achievement of organisational objectives (Analoui and Karami 2003). The performance management system adopted should promote and reward the achievement by employees of core values critical to the organisations success. For example, if teaming with strategic partners is a core organisational value, then employees should be induced to collaborate with partners and rewarded for the same. The performance management system should set behavioral standards for employees in key competency areas, review and discuss these standards with employees particularly the relationship of these standards to their specific jobs and departments. Bench marks set for employees should be related to organisational strategy and their development should be a core part of the goal setting process. Development goals can aim to improve current job performance or future career advancement. Where organisational goals are hard to translate into individual goals, then organisational goals can be cascaded into more refined goals and expectations at divisional, unit, team and eventually individual level. Continuous discussions and consultations where executives first develop divisional goals that align with organisational goals, then group goals that align with unit goals and eventually aligning individuals to organisational goals are realised. Essentially, a hierarchy system of goals where each level supports goals that are directly relevant to the next level should be established ultimately achieving critical organisational objectives. For employees in jobs that evolve or change constantly, short term goals that are specific and achievable should be set to avoid demoralising them. Feedback and appraisals should be given as employees reach key milestones or goals during the rating period. Employee commitment to goals is critical to goal attainment, and employees should feel that they are in a position to achieve the goals. Employees should participate in the goal setting process, accept their targets and through motivation work towards those targets. Managers should support employees to achieve those goals by providing guidance and resources. Management experts insist that goals should be difficult to achieve and that they should be limited to three or less areas to avoid choking and overloading the system. The behavioral and result expectations set during the performance planning process should be discussed and feedback provided on a continuous basis throughout the rating period. Feedback should be provided when exceptional or ineffective performance is observed (Shaw 1995). Periodic feedback on accomplishments and contributions are invaluable to a successful system. Unfortunately, this does not happen because managers lack skills required to provide objective feedback in ways that don’t alienate or upset employees. A feedback system that provides a two way communication process and ensures joint responsibility of managers and employees has been advocated by HR experts (Ward and Peppard 2002). This implies training both managers and employees on their roles and responsibilities in the performance feedback process. Managers are expected to provide feedback in a constructive, candid and timely manner. Employees are expected to seek feedback and ensure that they understand their performance ratings and react positively to the feedback (Shaw 1995). Effective and progressive performance conversations between managers and employees are a critical determinant of the success of a performance management system in achieving maximum benefits from a coaching and development perspective (Ward and Peppard 2002). Managers should provide feedback professionally by availing immediate positive development feedback privately, ask for employees’ views, be specific about expected behaviours, focus on the action; not personality, plan development in collaboration with employees, and help in development by providing resources. Where formal reviews take long to occur, informal feedbacks should be used as a daily work routine. Experts have pointed at the informal feedback system as a driver of performance. Several organisations have effectively used employee input, sometimes in the form of self ratings that are compared with manager’s ratings, but this system has been plagued by defensiveness, disagreements, and resentment (Evans 2011). A safer alternative is to ask employees for statements of key results and meritorious achievements over the rating period. Advantages of employee input are that it enhances ownership and acceptance, reminds managers of employee results and how they were achieved, and employee generated accomplishments can be included in formal appraisals and used as input for pay or promotion decisions if there is concurrence with the managers review. Competency models used as a basis for performance management systems articulate knowledge, skills, and abilities that are instrumental to achieving organisational outcomes (Evans 2011). Job analysis techniques like observations, focus groups, and surveys are used to identify key competencies associated with critical work behaviour. The competency models used include a full range of success factors, that is, technical, leadership, and interpersonal competencies. They not only communicate important information, but also form a foundation for developing integrated HR systems such as staffing, training, promotion, succession planning and performance management (Neely 2001). When developing a performance management system, a reasonable number of competencies should be chosen to obtain the most imperative aspect of performance. HR practitioners advocate that competencies should be defined in terms of important job behaviours and expectations associated with them. Behavioral definition provides a solid basis for gauging employees’ performance effectiveness. The competencies defined should reflect different levels of responsibility, complexity, and difficulty characteristics of employees’ job at different levels (Neely 2001). Employees at different job levels are paid differently based on experience, responsibility, and contribution. Performance evaluation should articulate clearly how expectations change at different levels and the parameters used to gauge performance at each level (Zoltners, Sinha and Zoltners). Defining competencies in terms of behavioral performance standards helps employees comprehend what is required of them and to offer consistent standards of evaluation thereby increasing consistency, transparency and fairness. Some competency models are developed to apply to all jobs in an organisation while others contain a core set of competencies that apply to all organisation staff and additional specialised competencies for specific technical or managerial responsibilities for a particular job. Advantages of using a single standard across job groups or jobs saves development time, resources and achieves more consistency in expectations communicated to the staff. Performance standards ease the process of capitulating evaluations from different managers’ levels the playing field for all staff, and is considered the best practice by HR experts. Evaluating employee results is a component of good performance management system. Results vary with nature of employee job description and assignments. Different methods are used to measure and evaluate results (Chapman 2005). One way of evaluation is tracking objective indicators of performance like volume sales and profitability, but this system is bound to be plagued by credibility issues. For example, employee productivity can be affected by opportunities available. An example of this is when one employee is having modern equipment while the other is using a less efficient older model. The one with modern equipment might be more effective not due to superior skills, but due to a better opportunity (Chapman 2005). Due to the problems occasioned by the objective evaluation system, some organisations opt to collect information on employees’ most meritorious accomplishments and the corresponding impact. This is considered a more inclusive and fair system. For example, it captures team leadership skills of an employee (Spitzer 2007). Numerical rating is used for evaluation where employees are rank ordered, and a point scale system is used to differentiate between employees (Spitzer 2007). The numerical scales are then averaged across rating categories to obtain a synopsis score for decision making. It is advisable not to use numerical rating scales for developmental programs as employees focus on their score rather than understanding and planning for their improvement needs. While ratings do not convey sufficient information on performance, they are extremely useful source of feedback because they provide specific behavioral examples that aid employees to understand their evaluation and score. Experts insist on narrative description to substantiate numerical scores if they are used for decision making. The 360-degrees feedback method of evaluation captures information obtained from managers, peers, direct reports and customers. If feedback information for decision-making is to be collected, then ratings from at least three raters must be collected, averaged and reported to the employee. This ensures accurate feedback and protects the anonymity of the raters. Different raters give different views of employee performance and thus more complete picture of employee effectiveness is achieved. Experts pass the multi-choice assessment as more convincing and credible for communicating development needs, it also absolves managers from blame for poor ratings. Due to the complexity and administrative burden of multi-rate system, automation is recommended to make them more manageable. For decision making, managers are encouraged to be gate-keepers for integrating information collected from other sources, adjudicating its reliability, eminence, and balancing it against other accessible information. In general, multi-source evaluation systems are not recommended for decision-making processes because of their vulnerability to compromise in integrity and quality. Performance review involves discussions between managers and employees on ratings, narratives and rationale for the evaluation accorded. It can also be a time when development activities and needs are planned. To address development needs comprehensively, it is recommended that development handbooks are incorporated into the performance management system, in order to have a clear roadmap for helping address development areas. Implementation is the most important and challenging stage of developing an effective performance management system, at the core of the system is the need to provide a user friendly, value added system that employees and managers can use effectively. The system should be aligned with other HR systems in the organisation. It should be inclusive and accommodate all employees irrespective of hierarchy. Communication and change management process must be clear and simple so that employees can understand the advantages and rationale of the system or else they will feel threatened and sabotage the process. Automation generally facilitates the performance, management work flow and substantially reduces paperwork. It enables staff to have widespread access to performance management tools and a standardised structured approach for collecting and storing data. Emotional intelligence and its strategic importance in HRM Emotional intelligence (EQ) is the intelligent use of emotions to guide an individual’s behavior and thinking towards better results. It is the ability to perceive emotions, access and generates emotions to assist in thinking, understand emotions, and to reflectively control emotions to endorse emotional and intellectual development. It has been argued that EQ can be used to derive competitive advantage and drive profitability (Goleman, Boyatzis and McKee2002). It is a requirement for top leadership qualification and performance to possess EQ in addition to the mores of, technical, intellectual abilities, and qualifications. In respect to management, it is the ability to deal with one’s own emotions and those of others and use the information in decision making. Emotions are perceived to be high intensity feelings triggered by specific stimuli, demand attention, disrupt cognitive processes, and behaviors. It is dealing with disruptive emotions that can upset organisational settings that require a specific set of abilities and competencies to empower an individual to cognitively utilise and manage emotions towards achievement of goals. It is in the context of being able to motivate oneself, persist in the face of frustration, control impulse and delay gratification, control mood and keep distress from swamping the thinking process, and empathies and hope that EQ finds its place in organisational management competence. Emotional intelligence has been attributed to star performances in personal and organisational endevours. In a work place context, EQ can be utilised as an effective predictor of behavior as regards to team and leader performance and conflict resolution. Consequently, an effective and efficient leader must be able to perceive, use, understand and manage emotions to achieve top performance. The leaders’ ability to perceive their emotions and feelings should help them perceive the emotions of peers and subordinates, instill the ability to express them accurately, and distinguish between fake and real emotions. Ability to empathize is the most important element of EQ since it facilitates positive interpersonal relationships and establishes affective bonds. A leader’s ability to accurately use perceived emotions can be used to encourage and motivate others, generate creativity, and open mindedness. By possessing self awareness and social awareness, a leader portrays self confidence, integrity, initiative, self control and by expressing such traits, peers identify with the leader as a positive role model and use the leaders as examples to shape their behavior, creating a high EQ loop leading to better organisational performance. High levels of EQ among individuals in an organisation assists in adaptability to change, openness to new ideas, receptivity, mobilisation and learning, enabling them to effect the highly disruptive change emotions as they experience different transitions in the organisation(Caruso 2004). It is not possible to train employees on the whole range of EQ skills. Therefore, HRM executives focus on those that can be taught to improve specific EQ in the work force (Goleman, Boyatzis and McKee 2002). For example, the facial action coding systems which register the muscles that move when a particular emotion is expressed can be taught in a classroom, this skill helps individuals understand and perceive emotions. Pioneers of EQ, however, object to conventional teaching of EI skills as they claim EQ development involves behavior change that can’t be taught in a classroom. The more advocated system is coaching and mentoring which can be achieved through behaviour modeling, where people learn by observing and emulating others. This can be pragmatically achieved through exposure to positive models through work place interaction or assessment of exemplary case studies. Assessment would be done in a 360 degree feedback system and recommendations made for areas to improve on. Conclusion The efficiency of an organisation’s performance management system is dependent on many factors. Most importantly, the performance management system should be aligned with the organisations objectives and key success principles. The performance management system should be efficiently administered to make it user friendly, relevant, and compatible with the organisations staff, and staff should be able to relate with it. The system should help employees achieve tangible, value-added benefits in performance, planning, development and feedback. When well implemented, EQ can be a predictor and driver of organisational performance. HR professionals should Endeavour to develop individuals who possess abilities, competences and traits, which enable them to recognise, manage and mobilise emotions using EQ techniques. The management must embrace emotional intelligence as a continuous development tool. Bibliography: Analoui F. Karami A. 2003 Strategic management in small and medium enterprises. London [u.a.]: Thomson. Chapman S. C. 2005 Controlling strategy: management, accounting, and performance measurement. Oxford Univ. Press: Oxford [u.a.]. Condly, J. and Stolovitch, H., 2003 The Effects of Incentives on Workplace Performance: A Meta-analytic Review of Research Studies. Performance Improvement Quarterly, 16 (3), 46-63. Evans J. 2011 Quality and performance excellence: management, organization, and strategy. South-Western Cengage Learning: Mason, OH. Goleman D., Boyatzis R. and E. McKee A. 2002 Primal leadership: realizing the power of emotional intelligence. Harvard Business School Press: Boston, Mass. Neely A. 2001 Business performance measurement: theory and practice. Cambridge University Press: Cambridge. Shaw G. D., et al 1995. Performance measurement, management, and appraisal sourcebook. Human Resource Development Press: Amherst, Mass Spitzer R. D. 2007 Transforming performance measurement: rethinking the way we measure and drive organizational success. American Management Association: New York. 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