Performance Management Systems and Firm Performance - Essay Example

Performance Management In the fiercely competitive and dynamic business scenario to today’s world, human resources functions as a very powerful strategic asset. Human resources ensure that every employee in the organizations is competent and has the necessary tools to perform their job effectively. Value of Performance Management Programs The two main drawbacks of executing an appraisal system as opposed to a performance management system are (Deb, 2006): This system would focus more to appraisal of people and less on their development. Thus performance appraisals lay more emphasis on past rather than future objectives. Realistically speaking goals in an organization are not static and are constantly changing in the dynamic work environment. An appraisal system is tied to the salary as a result of which it restricts meaningful and creative execution of performance goals. For our company performance play a vital role in determining pay, promotions, transfers, terminations and other such decisions that impact well-being as well as the overall company performance. Thus access to objective performance evaluation systems is key to the overall benefit of the company, employees and the society. An objective performance management system will help improve the relationship between the managers and their subordinates as well as boost motivation (Jackson et al.2011). Role of the HR Department in Performance Management As a newly designated manager for the HR department, we would ensure that performance management is properly designed, documented and implemented (Pope, ). It should be clearly understood that proper execution of the program cannot be done without cooperation of line managers and unless the top management shows commitment to it. Activities such as ensuring performance management is embraced on a daily-basis, timely completion of performance reviews, providing valuable feedback throughout the process and making developmental opportunities available to high performers are all responsibilities of line managers. Thus it is the proper execution of the performance management program by management and line-managers that can make or break it. The role of HR for this proper execution would be to: Provide the necessary training to line managers so they conduct effective performance management Provide training and encouragement to managers to participate in the performance management system Play the role of liaison between employees and supervisors in case of problems that may occur with proper implementation. Key Areas of Performance Management Performance Appraisals According to the evaluation of past organizational practices, some departments have informally attempted to introduce performance-based pay systems in the form of appraisals. This process needs to be properly documented and managed by the HR department in coordination with other department managers. It has been proven in a study conducted by Subramanov, Krause, Nortom and Burns in 2008 that creating a model for competitive pay can be used as incentive to enhance a company’s performance via enhanced employee performance (Chow et. Al, 2012). Some aspects that the new appraisal system should incorporate are: Require managers to be specific and provide details that can be observable and based on situations. Encourage managers to avoid common appraisal mistakes such as the recency effect and rating everyone as average. Encourage managers to provide encouragement to the employees in their feedback by identifying the positive contributions as well as the areas of improvement. Linking key areas of performance management The role of performance of company executive and their management teams reflects upon the company performance. Thus bearing this concept in mind the HR performance management program would enable us to evaluate the executive performance and identify the areas where strategic shortcomings lie and changes can be made effectively (Jackson et al.,). The key function of the newly established HRM system must be to form a correlation between the organization’s business strategy and the performance management system. The goal of my strategy would be to” link people for profit”, this can be achieved by linking the HR strategy to the business strategy (Chow et al.,2012) . According to Chow et al. (2012) empirical evidence suggests that the impact of HR practices is strengthened when these practices are matched with the competitive business strategy of an organization. Thus by treating human resources as a strategic tool, the company can channel the human capital to attain superior performance. According to Jackson (2011), all HR performance Management activities should be n accordance with the internal environment of an organization, the external environment as well as other HR strategies. In case of our company, the performance management system should comply with the business strategy, organizational culture, laws and regulations governing businesses in the United States as well as other HR policies such as job design and incentive system. Role of Training and Communication The new performance management HR system cannot be executed without providing proper training. According to Tyler (2012) for a company that fails to train the managers on effectively assessing employee performance the feedback given on a performance appraisal system would be inaccurate, as a result of which can be bad decisions in employee compensation, succession planning and high turnover. She further points out that following the financial crises a lot for companies are cutting corners on employee training programs which is very unfortunate because the human capital is responsible for about 70% of their expense (Tyler, 2012). As a manager for the HR department, the following activities need to be performed in order to perfectly execute training for the performance management system: We would obtain support from company executives because their approval is vital to gain company-wide acceptance of the HR performance system. The company executives should project the idea to line managers that they encourage the acceptance of the performance management system. Ensuring that there is proper documentation of the process through training and eaching line managers how to properly document the process. We would design the training to help managers in developing as well as disciplining employees. This would enable the managers to mentor high performance to enhance their value to the organization as well as teach them to intervene when they observe poor performance that can harm the company. Training should be an on-going process because there is a limit to which supervisors can learn in a class-room, actually learning will occur when they will apply the concept to their departments and that is where the HR department should be present to get feedback and provide assistance. For proper execution of the HR performance management system, the role of communication is very vital, by getting to know the employee needs, the HR department can provide more effective guidance and career development plans. In this context the role of my department as a coach or advisor would be very important in addressing issues of performance management, scheduling and career development. This HRM system would be designed to lay emphasis on continuous employee development, which is managed through extensive training and learning. For recruitment purposes, staffing policies need to be designed to attract high potential employees and for present employees and managers, career counseling programs need to be designed that focus on employee long-term development. In case of this company, the aim of the HR department if to make effective use of the existing strategic resources and develop them into strategic assets by means of a strategy and this cannot be accomplished without the acceptance and commitment of employees (Hyondong & Kang, 2013). When our department introduces the new performance management program, we seek to enhance employee acceptance and commitment through employee participation in decision-making process. The HR department would encourage participation by keeping employees well-informed about the business of the organization. References Chow, IH & Stephen, TT and Chew, IK. (2012). HRM systems and firm performance: The mediation role of strategic orientation. Asia Pacific Journal of Management 30:53–72 Deb, T. (2006). Strategic Approach to Human Resource Management. Atlantic Publishers & Dist. Hyondong, K and Kang, SC. (2013). Strategic HR functions and firm performance: The moderating effects of high-involvement work practices.  Asia Pacific Journal of Management. Mar2013, Vol. 30 Issue 1, p91-113.  Jackson, SE. Schuler, RS and Werner, S. (2011). Managing Human Resources.Mason OH. Cengage Learning. Pope, E & CCH Inc. (2005). HR How-to--performance Management: Everything You Need to Know to Manage Employee Performance. Chicago IL. CCH Incorporated. Tyler, K. (2012). Train Managers, Maximize Appraisals. HR Magazine, 57(12), 68-70. Read More