Performance Management and Human Resource Development - Research Paper Example

?Introduction Human capital determined organizational success and survival. This is the reason why most organizations nowadays are continually investing to these so called fungible resources. According to Kevin Kelly (CEO, Heidrick & Struggles), “as we emerge from economic crisis, the right talent will become more difficult to find...will have to look beyond the talent pools they currently know-multinational and diverse talent will be the key to fulfill the gaps” (cited in World Economic Forum, 2010, p.14). But because organizations of today are suffering from severe economic recession, they need to manage costs (labour costs) as much as possible. As a result, they need to look for strategies that will help them not just to squeeze costs but at the same time improved the overall productivity of the company. Performance management (PA) served to be the answer because this system is specifically designed to drive profitable growth. Nevertheless, organizations encounter the problem that their daily activities are not associated with their strategy, initiatives, resources and risks; that is why they developed the strategy-related process known as performance appraisal. The main thrust of this paper is to explain what is meant by the term performance management and show the importance of performance appraisal scheme. Performance Management (PM) Performance management (PM) has no exact definition for it is emotive, “meaning different things to different people and dependent on which level in the organization they occupy” (Cattell, 2005, p.157). Likewise, several research studies with regard to the handling of employees are not consistent with their performance indicators because of diversity in individual needs and workplace expectations that differ from country to country. This process is a systematic approach that is interested in motivating employees’ performance and productivity, monitoring, and assessment of performance through performance appraisal system. PM has two management fields that is focused on the progress and success toward goal achievement, and these are individual behaviour toward the organization and organizational strategies. The first aspect is all about organization as a whole, its performance and the performance of the top executives (managers and heads). The second aspect is the performance of individual system; they are the individual employees that worked for the achievement of organizational goals and objectives. These two aspects are distinct from each other in terms of the covered scope and resources. PM on employee’s level is really necessary to the company and this process would be effective if planning work and setting goals are consistent all throughout the execution. Through these, appraisal would be much clearer to the employees particularly on what aspects they will be evaluated, and the consequences behind the good and bad performance. Because of these consequences, coaching/feedback is given to the employees right after their evaluation. This is what Hackman and Oldham (2002, p.123) inculcated in their job design theory which “contends that a person’s intrinsic motivation is affected by his or her psychological state...” The only way to correct de-motivated behaviours of employees is to reward them intrinsically by giving them positive or negative feedback. However, there are instances that performance management is hard both to the managers and to the employees of the organization. Managers in their part, they tend to avoid PM process because they are afraid that their connection with their employees will be put to risk once they give feedback. Also, on the part of the employees, they felt embarrassed with the negative connotations from their managers especially if their performance did not meet with the expectation, and so their pay or advancement will be jeopardized (Chladek, 2006). The worst scenario is that both managers and employees are not taking this process seriously as they thought that this is just a compliance on the paperwork drill mandated by the human resource personnel of the company. Performance Appraisal (PA) “Performance appraisal (PA) is a formal management system that provides for the evaluation of the quality of an individual’s performance in an organization” (Grote, 2002, p.1). This management tool is significant in developing employee’s performance especially that they are required to participate in goal-setting procedure and work planning. This is also favourable to the company considering that it provides not just one but many organizational purposes such as: performance feedbacking, provide basis for promotion, encourage improvement, increase motivation, a communication tool for goal setting, succession planning, training and development, recruitment and selection, and improving the overall performance of the organization. Aside from this, PA also promotes communication and alignment of goals between employee and supervisor/managers, it also assesses previous performances, and most importantly it helps in setting objective and goals for the company. Furthermore, because of these benefits, it has been estimated that the use of employee appraisal is steadily increasing among private and public sector organizations in the world (Longenecker & Nykodym, 1996). Organizations with world-class PA are saying that it’s hard for them to divulge their performance management models because they considered this as one of the sources of their prosperity and competitive advantage. However, they mentioned that an effective performance management system should be as plain and as accurate as possible and should be aligned with the company’s objectives, core values and strategies. Longeneck and Nykodym (1996) studied the PA of large U.S. multi-purpose public sector service organization and they discovered that these organizations perceived PA as an effective tool for improving motivation/performance among their employees. The result of the case study also presented that managers are more in favor with PA compared to their subordinates because it strengthens their relationship with their subordinates. Coca-Cola Bottling Co. is one of the global companies that used performance appraisal wherein they are conducting it annually (spring season) and have found profound effects toward their employees such as increasing motivation and satisfaction. Another company that witnessed the success brought by PA is McDonald. Through the appraisal, the company discovered that their employees need recognition for their work efforts and individual training and development. And so, they are giving them incentives for the satisfaction of their human desire, and providing them regular and efficient training for the improvement of their careers (Facella & Genn, 2008). Aside from the two management field of PM, PA also has four phase models. This will show how performance appraisal scheme contribute to PM. Phase 1: Performance Planning (Communication). This step is usually done at the start of the year wherein the personnel department together with all the employees will discuss the goals that need to be attained for the next 12 months and how will these goals be achieved. However, before this session, the initiators must understand first the current performance measurement system of the organization, and review job descriptions and expectations of employees. Phase 2: Performance Execution (Coaching/Feedback). This phase is intended to increase the probability of success as to what has been discussed in the performance-planning meeting. Coaching and feedbacking need to be a two way conversation and perception should be shared between the supervisor and the employee. This is to give visual presentation of employees’ performance and problems that may arise during the execution. After the problems have been discussed, the next thing to do is to talk about solutions. It is always important to walk the talk that is why after coming up with solutions, it should be followed by an agreed action plan, and this should be regularly monitored in order to be effective. Managers and employees are in need of this information because these will give them the chance to know their current performances, what areas do they need to improve, and when to adjust and set goals for themselves. Phase 3: Performance Assessment. As formal performance appraisal is approaching, managers/supervisors started to accomplish the performance appraisal’s form with corresponding comments and recommendations. This assessment will be sent to the top management for review and approval. Phase 4: Performance Review. After the assessment is conducted, it will immediately be relayed to the employees. The review should have strengths and weaknesses so that employees will be properly guided as to the distance of their actual performances against the plan, and it must be given objective by looking at the behaviour itself and not the personality. Distinction between PM and Performance Appraisal Performance management and appraisal are different from each other such as in terms of time intervals of occurrence, developing committee, time intervals of feedbacking, and roles. In terms of time intervals of occurrence and developing committee, performance appraisal occurs annually and this is usually prepared or requested from the personnel department whose results are being discussed between the supervisor and the employee. On the other hand, performance management happened not once-a-year but frequently and this procedure is typically instituted by the employee’s immediate supervisor. Likewise, the time intervals of feedbacking for performance appraisal are yearly and this is given to all employees while for performance management, there is no time frame as long as the process is needed. Lastly, the role of performance appraisal is to let the employee know his or her rating in terms of effectiveness and identify the areas that need improvement. On the other hand, the role of performance management is focused on performance criteria wherein the “supervisor and employees are attempting to come to some shared meaning about expectations and the strategic value of those expectations, rather than simply clarifying the meaning of a non-strategic performance area and definitions of effectiveness in that area” (Landy & Conte, 2010, p.234). Conclusion Performance management is proven to be an effective systematic approach that helped companies improved their corporate visibility and profitability in terms of increased performance of their employees. It is noted, that strategy should be plain and simple because good strategy depends upon how it is executed. On the other hand, part of broader aspects of PM is performance appraisal which is considered to be the most popular tool among global companies for it provides them with host of positive benefits that made them competitive. References Cattell, A., 2005. Performance management and human resource development. In: J.P. Wilson. ed. 2005. Human resource development: learning & training for individuals & organizations. London: Kogan Page Ltd. Ch.9. Chladek, T., 2006. Performance management is here to stay. Public Management, 88 (8), pp. 6+. Facella, P. & Genn, A., 2008. Everything I know about business I learned at McDonald’s: the 7 leadership principles that drive. USA: McGraw-Hill. Grote, D., 2002. The performance appraisal question and answer book: a survival guide for managers. New York, NY: Amacon. Hackman, J.R. & Oldham, G.R., 2002. Job characteristics theory. In: S. Hollyforde & S. Whiddett, ed. 2002. Motivation handbook. London: CIPD, pp.118-126. Landy, F.J. & Conte, J.M., 2010. Work in the 21st century: an introduction to industrial and organizational psychology. 3rd ed. Hoboken, New Jersey: John Wiley & Sons, Inc. Longenecker, C.O. & Nykodym, N., 1996. Public sector performance appraisal effectiveness: a case study. Public Personnel Management. 25 (2), pp. 151+. World Economic Forum, 2010. Stimulating economies through fostering talent mobility. [Online] pp. 1-55. Available at: http://www.weforum.org/pdf/ip/ps/TalentMobility.pdf [Accessed 3 March 2011]. Read More