Key Areas for Improvement within the Performance Management System - Essay Example

Performance management system Name Institution Date Table of Contents Table of Contents 2 Performance management system 3 Introduction 3 The internal and external environment of the organization 3 Key areas for improvement within the PMS 8 Interventions to improve the problems 9 Conclusion 13 Reference 14 Performance management system Introduction Prior to designing a system of performance management there ought to be an understandable explanation of performance management. The definition then helps to understand how the system can work (Aguinis, 2009). Performance management is considered an ongoing process of recognizing, measuring, and coming up with the performance of teams and individuals and bringing into line performance with an organization’s strategic goals. The presence of a system of performance management that is effective is normally the chief differentiator involving organizations that generate sufficient outcomes and those which do extremely well. Without performance management’s attention at every level of the organization, it can be tricky to view how the organization can get competitive advantage which is grounded on talent. It is argued that it is human capital that can only generate a competitive advantage that is sustainable (Aguinis, 2013). This paper will discuss a number of issues that relate to performance management system (PMS) with regards to the organization where my friend works. The internal and external environment of the organization There are situations, events, and things that happen from inside and outside an organization and influence the company in negative or positive way (Andrew, 2011). Some people call them driving forces, whereas others refer them as environmental scans. Driving forces that are internal refers to occurrences that take place within the organization and are generally under the organization’s control. For instance, having excellent technology in the organization, and how this impacts the organization either positively or negatively. Driving forces that are external are the things that happen outside the company and basically are not under the organization’s control (Andrew, 2011). These include and not limited to economy, demography, government regulations, and competition. Whichever the situation, informational resources about the external and internal environmental forces are crucial to a company’s survivability and stability and every data ought to be gathered and evaluated from which strategies can be implemented in order to maximize organization’s opportunities and strengths, at the same time minimizing threats and weaknesses. According to Cadez & Guilding (2012) the internal environment of an organization encompasses the elements in the organization, such as management, present employees, and particularly organization culture, which describes the behaviour of employees. Even though a couple of elements influence the organization entirely, others influence the manager only. Getting organization culture correct is essential, which is the reason organizations heavily invest in moulding their cultures as well as influencing the workforces’ behaviours (Ahmadi, et al, 2012). The path to developing organization culture, specifically one that turns out to be a competitive advantage foundation, calls for acquiring insight into the way culture is built; this entails the significant role that attitudes and views of employees play during the process (Varma, et al, 2008). Organizations which take time to comprehend the course and device an extremely engaged personnel can anticipate seeing considerable improvements in performance (Andrew, 2011). Organizations that built a culture in line with business strategy expect greater rewards as well. Presently, no organization is able to go on mission and succeed in the competitive world without upholding a powerful advantageous culture (Ahmad, et al, 2012). This is why formulating a strong organizational culture will be very beneficial for the success of the organization. The culture of the organization is very influential and can lead to the failure of success of a business (Zain, et al, 2009). A powerful organizational culture is the one that has competitive advantages that are most sustainable an organization can have since it is hard to copy. In simple terms, culture is a set of mutual values or norms in the workplace, or simply what is described as an organization’s method of carrying out things. Upbeat, fun, positive, family-friendly, negative, stressful, and demoralizing are some frequent adjectives applied in describing cultures at work. A number of these have constructive influences in performance and production, whereas others are indicative or add to organizational issues. Since cultures of organizations are exceptional and provide strategic benefits, it makes absolute sense that organizations would take into consideration culture within strategic management (Zain, et al, 2009). For instance, an organization that is high-performing and has a business strategy of offering an environment that is fun and customer friendly. This may not align effectively with an inactive culture or the one that has very conventional and stoic personnel. Instead, it would be essential for the organization to employ workers who have friendly, fun and customer-centred characteristics. Key Performance Indicators (KPI), assist an organization identifies and measure organization’s progress toward the goals of the organization. Once the mission of an organization has been analyzed, stakeholders have been identified, and goals have been defined, there is need to determine progress toward the set goals. Those measurements are the KPI. According to Velimirovic, et al (2011), KPI reflect the goals of the organization. For example, a company that has “to be the company that is most profitable within the industry” as part of its goals will have KPI that appraise profit and associated fiscal measures. KPI ought to be quantifiable. There should be a clear statement of goals that can be measured. Establishment of time frame is important for every KPI, with major checkpoints at several intervals. KPI include non-financial and financial indicators an organization uses so as to assess and strengthen how successful it is, aiming earlier estimated goals that are long lasting (Velimirovic, et al, 2011). Appropriate indicators’ selection to be applied for appraising is of greatest significance. Organization’s process of a business is needed to be constituted so as to realize an efficient and effective system or performance evaluation through KPI. Organization’s process also means user orientation and essential flexibility in today’s condition of worldwide competition. Like external environments, organizations need to identify internal factors, that is; strengths, weaknesses, opportunities and threats (Varma, et al, 2008). Recognizing which ensures that organizations improve, prevail over weaknesses, deal with opportunities as benefits and avoid any threat. With this respect, Emirates Airline where my friend works has various strengths, such as differentiating from the rest of airlines, while it reacts to latest technology, e.g. self-check-in and e-ticketing services. An evident weakness is high prices by Emirates because of its massive investments in aircrafts’ ordering. Even though the airline has opportunities, several threats are of concern, like oil prices’ increase, airlines that are low cost, and the killer diseases’ spread (Varma, et al, 2008). During the process of constructing policy options, it is important for the organization to consider external environmental threats and opportunities, current and future although internal prospective, the weaknesses and forces of the company, as well as competitive advantage against competitors. Factors of external environment can be classified into several groups. The first is political factors. The legal structure entails every law and legal rules involve the relational scheme created between business and political power. There is need to guarantee a legal and political climate that is stable, which might discourage or encourage business (Epstein & Rejc, 2009). The second is economic factors, which directly influence business organizations through inflation, interest rates, and fiscal policy, exchange rate, and price fluctuations. Another significant factor in external environment is technological factors. It is cited that with the latest technologies, it is easy to obtain productivity presently, and forming new products. To facilitate external environment, experts within the field came up with micro-environment and macro-environment. Micro-environment is composed of organizations’ actors, interest groups within direct vicinity, customers, public power, competitors, and suppliers. Macro-environment has trend and factors that take place within the society and the organization does not have control over them (Cadez & Guilding, 2012). External environment reveals the industry of airline is in the stage of maturity with a sluggish increase rate, which led to raised level of competition. Three forces have been cited to have an immediate influence in this business, these are; buyers and suppliers’ bargaining power and strength of rivalry (Varma, et al, 2008). New entries’ barriers are high hence decreasing the threats of whichever new entrant. Other factors like economy, political, technological, and social affect the business through an increase or decrease of passenger’s traffics. Organizations apply various major factors to extend successes to maintain a good place and enhance loyal user base, such as service differentiation, making a powerful band name as well as executing new technology and merge alliances. Key areas for improvement within the PMS There are several components of PMS. Some of which would be targeted for change in order to improve the system. One area that needs change is performance evaluation and reviewing. Appraisals are usually carried out twice every year within the organization as mid reviews as well as yearly reviews held during the close of the fiscal year (WiseGEEK, 2013). During this process, first the appraise provides the ratings within the self-evaluation form in addition to describing achievements within a time frame in quantifiable measures. Subsequent to self appraisal, ending ratings are given by the person who appraises for the measurable and quantifiable achievements of the worker being appraised. The whole review process seeks a lively participation of the appraiser and the employee for reviewing the loopholes’ causes within the performance and the way it can be conquered. Another area that needs improvement is performance feedback followed by individual counselling as well as performance facilitation. Counselling and feedback should be given extra highlighting during the process of performance management (Varma, et al, 2008). This is considered the phase in which employees obtain awareness from the one in charge of appraising concerning the improvement areas in addition to information regarding whether the worker is making contributions to the expected performance levels or not (Grote, 2005). The worker gets a clear and very obvious feedback. Additionally, development and training needs of the worker is identified as well. The appraiser takes on every possible step to make sure that the worker meets the accepted results for the organization via effective individual guidance and counselling, advising and representing the worker during training programmes that build up the competencies as well as improve the general productivity (WiseGEEK, 2013). Rewarding performance that is good is very essential. This is regarded a very crucial element since it determines the employee’s work motivation (Hope & Player, 2012). In the course of this stage, a worker is visibly acknowledged for good performance, thereafter rewarded. This phase is very critical for a worker because this might have an immediate influence on achievement orientation and self-esteem. Any contribution appropriately identified by the organization facilitates a worker in dealing with failures in a successful manner and gratifies the affection’s need. Interventions to improve the problems The first intervention would be to link reward straight to performance. Forming a reward culture that is performance-based might appear like a theoretical vision for a number of organizations. On the other hand, a lot of senior managers perceive it as a significant tool for accomplishing success. That is because employee potential is unlocked, thus retaining and motivating higher performers. According to Varma, et al, (2008) a powerful reward culture that is based on performance is able to unlock potential of performance and provide financial results that are healthier. This proposed intervention would be effective because of the following reasons. There would be goal alignment that is clearer; focused growth and planning of career; increased employee motivation and engagement; improved retention; and higher cost savings (Varma, et al, 2008). In terms of clearer goal configuration, reward that is based on performance facilitates alignment of objectives of the employees into the broader goals of the business. This is crucial to the organization’s success. Communication of goals, as well as tracking every worker’s progress against goals, is important, and provides an array of positive outcomes: employees are extra industrious, and concentrate on obtaining the correct things for the business; they develop responsibility that is shared, since goals are generally cascaded to each person within the organization; and employers monitor the progress of employees all through the year, and provide immediate coaching or reinforcement, to maintain performance on the track (Dawn, 2013). With respect to focused development and planning career, through individual objectives’ alignment to organization goals, it is possible to focus activities of development and learning on issues of value to the business (Hope & Player, 2012). Eventually, this helps to raise the ability of the employees, and result in improved business outcomes. By unlocking and fostering worker potential, one can work with workers to design and device careers within the organization. This hence facilitates activities of succession planning and talent management. When employees are provided with greater clarity concerning business goals, and expectations about their personal outcomes and reward, they concentrate more on performance. Through reviewing of performance, offering recognition and response, and offering them the encouragement to grow their ability, relationship improves, and managing employees become easier (Bouckeart & Halligan, 2006). Workers will be more involved with the company, and feel motivated to work at optimal levels. They will actually want to take an extra mile benefiting themselves and the organization, understanding that their efforts are truly valued by the managers. With no doubt, this results in both personal and organization success. In case employees are involved, motivated, and appropriately rewarded, they will not want to leave the organization. In a system that is well structured, managers have effortless access to the information required to reward people for real performance. This helps them to follow performance against established expectations, and hence reward them accordingly. Thereafter, employees can influence their individual financial reward directly, which several experts in HR argue is essential to retaining performers of high level. Targeted development and learning will potentially set aside some money on activities that are wasted, which their impact is not felt directly on the organization’s goals or success (Dawn, 2013). Improved rates of retention will result in a decrease of advertising, employment, training and development expenses, to back-fill tasks. Maybe most significantly, a reward system based on performance and is well structured can bring about a lot of savings every year, through assisting to prevent rewarding people whose performance contribute less or nothing to business goals’ achievement (Varma, et al, 2008). The second intervention is to appraise and support complete participation as well as success. There is extensive recognition that a yearly meeting to appraise progress does not entail similar advantages as continuous dialogue and response. Feedback delivered once it is very applicable promotes learning and offers the chance to facilitate accommodations so as to fulfil objectives (Varma, et al, 2008). A number of organizations move towards carrying out performance appraisals twice every year, whereas a small percentage is attempting to carry them out more often (Dawn, 2013). Despite the frequency, the approach towards continuing feedback is important. In case there is recognition of the organization and encouragement for the necessity to construct positive response into the structure of daily interactions blended with raised visibility into organization’s goals, then the surrounding will foster development and steer performance improvement that is goal-directed (Varma, et al, 2008). It is important to design the whole process of PMS correct. The process of performance management ought to add value, or else there will be surfacing of issues related to non-participation and resistance (Aguinis, 2009). Additionally, by itself, the process ought to be well-organized and simple, at the same time providing the essential value. Scheduling tools and automated reminders can assist maintain the track process. Another factor to put into consideration that adds to the success of the organization is management support from the upper level. This support should not just take the structure of oral support, but in addition to participation within the same process of performance management for evaluations (Varma, et al, 2008). Moreover, the present culture of the organization should be considered as well with regards performance management and performance appraisals. Employees should have the ability to openly talk about performance and take into consideration means of making improvements so as to progress (Epstein & Rejc, 2009). It is recommended to spend more time on the constructive aspects of employee’s performance during meetings (Varma, et al, 2008). In several occasions, discussing the positive elements of the performance of the employee should carry more time compared with the negative elements. For employee that are above average or performing, positive response and discussion concerning the way the worker can maintain performance growth should constitute the mainstream of the whole discussion (Bowes, 2009). This appears rewarding and very motivating to the employee. There is evidence of consequences of processes that are poorly structured. In case personal goals do not align with strategy of the business, then resources and time are wasted. Low levels of employee engagement might imply that people are not optimally performing (Grote, 2005). Conflicting criteria of evaluation and rewards can result in mistrust, reduced productivity and greater attrition. Once top performers do not see differentiation in ratings of performance, compensation and opportunities from underperformers, there could be suffering of morale. Lack of visibility, documentation, and accountability may negatively influence stakeholders who demand a lot of transparency (Bouckeart & Halligan, 2006). The moment accurate information on performance is not available or hard to access, decisions of induction and development together with decisions of project assignment might not be created in the individual’s or the company’s best interests. A yearly process may not sufficiently alert employers to issues within a suitable manner. Conclusion In conclusion, this paper has talked about various issues that relate to PMS. It is noted that a PMS is intended to support interaction as well as response between employees and management, institute expectations for personal work performance, thereby serving as a basis for rewarding employees that are top performers. According to the discussion, it is argued that performance process that is not well structured leads to disastrous outcomes. On the other hand proper structuring results in good results of the organization hence desired success. Organizations which do not appropriately implement and foster PMS might not experience every possible advantage of enhanced communication and employee development. PMS has a number of challenges but with effective preparations, it can bring about positive results. Reference Aguinis, H. (2013). Performance management (3rd edition). Upper Saddle River, NJ: Pearson Prentice Hall. Andrew, Klein. (2011). "Corporate culture: its value as a resource for competitive advantage". Journal of Business Strategy, 32(2), 21 – 28. Zain, Z.M., Ishak, R. and Ghani, E.K. (2009), “The Influence of Corporate Culture on Organizational Commitment: A Study on a Malaysian Listed Company”, European Journal of Economics, Finance and Administrative Sciences, Issue 17, pp. 16-26. Ahmadi, S.A.A., Salamzadeh, Y., Daraei, M., & Akbari, J. (2012). Relationship between Organizational Culture and Strategy Implementation: Typologies and Dimensions. 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