The Role and Issues of Performance Management in Compensation Decisions - Term Paper Example

? The Role and Issues of Performance Management in Compensation Decisions  Introduction The aim of the paper is to propose an innovative issue related to the system of compensation within organizations. The objective of proposition in such dimension is to help the organizations recognize strategic objective from the perspective of its long-run sustainability. The issue that will be discussed in this research paper is the various scopes and dimensions of performance management towards enhancement of the system of compensation with respect to a specified organization, Coca Cola. The compilation of different advantages and disadvantages that performance management can bring about within the organization for generating its effectiveness will be considered in this paper. Apart from the impact that performance management can confer towards the organization, other essential issues associated with performance management will also be discussed in this paper. Effectiveness of Performance Management towards Compensating Decisions Performance management is such a phenomenon, the effective implementation of which leads towards creation of appropriate environment for strategic management in Coca-Cola on a global basis. Effectiveness of performance management assists in evaluating as to whether the performances of the employees are in accordance with the standard level set for their performance. The process of performance management duly takes into consideration the regular review of the results being achieved through performance of the employees of Coca-Cola. In the modern context, not only the results, the behaviors of the employees towards their peers and senior members are also reviewed. Moreover, the attitudes, skills, features and manners are also evaluated through the approaches of performance management. This overall analysis of the employees provides the basis for the organization to measure both their performance as well as their long run sustainability within the organization. Hence, successful implementation of performance management leads towards effective planning for the employees’ compensation by Coca-Cola. Additionally, the long-run sustainability estimation of the employees provide strong basis to the organization in determination of strategic objectives (Turk, 2006). Performance Management and Organizational Objectives The concept of performance management can be directly aligned with specific objectives of the organizations. The process of alignment can be effectively accomplished mainly thorough three fundamental areas within the company i.e. Coca-Cola in this case. These are the alignment among various divisions or departments within the organization, alignment among capabilities of the workforce within the organization and alignment among financial performance of the organization in various dimensions. Throughout the conduction of the process of these three essential alignment processes, the performance management aspects get associated with the specific organizational objectives. There are a number of functions that the organizations can effectively undertake after effective implementation of performance management that ultimately assists the organization in achieving its strategic goals (Schuster, 2010). The results of performance management help in recruiting and appointing skilled and efficient staffs for Coca-Cola. Compensating planning can be accomplished in the most competent manner through proper evaluation of the results of performance management. The incentives for the employees are successfully calculated for the employees through performance management. Learning management can even be planned within the organization as a result of implementation of performance management. The impact of performance management upon the above mentioned list of activities, aimed at the fulfillment of organizational objectives, is actually the indication that the performance management has been effectively implemented within the selected organization (Schuster, 2010). Favorable Condition for Implementing Performance Management The successful implementation of performance management can be achieved only in certain favorable conditions that are essentially accountable for the success of Coca Cola. The first and foremost required favorable condition can be termed as the exact management systems. The exact system of management is that process which sustains objective based collection of information related to employees’ performance along with maintaining record, effective analysis of the information and proper reporting of the analysis’ results. The success of performance management implementation will also be dependent upon proper financially supported environment and also availability of crucial human resources. Financial support for addressing required amount of cost and human support for effective implementation will be required (Asian Development Bank, 2011). Subsequently, the development of a culture of performance management within the organization shall be crucial with its concentration upon results. The generation of working environment that is based on results is perhaps more important than optimization of operational efficiency. Such a culture is favorable for implementation of new and innovative approaches of the management and thus would also be favorable for successful implementation of performance management (Asian Development Bank, 2011). Major Concerns for Implementing Performance Management The major concern that is taken into consideration for successfully implementing performance management within the company is related with the improvement of the employees’ performance (The Coca-Cola Company, 2011). An effective and excellent system of performance management within the organization is highly dependent upon the organizational scope as regards to how far the employees’ development of skills and abilities can be sustained. For aligning the performance management activities with the strategic objectives of the organization, it is essential that certain factors are fundamentally taken into consideration. The factors can be broadly categorized into those of system factors and person factors. Under the system factors, it is important that employees are provided with sufficient information, resources and incentives. These system factors are the basic constituents of the working environment of organization and are directly associated with enhancement of performance of the employees. Under the person factors, the concerns those are required for successfully implementing performance management and enhance employee performance are the knowledge and expertise of the employees, their ability to perform excellently and motivation (Ripley, 2002). Implementation of Performance Management across Various Occupational Groups Performance management is essential for employees operating in various levels of management across a number of occupational groups within Coca-Cola. This is such an important phenomenon which may be applied on different employees based on different parameters but its rudiments remain the same for everyone. However, the effectiveness of the process gets enhanced as per the hierarchy of levels of the organization. The difference across the occupational groups or more prominently, the levels of organization are noticeably observed with respect to the various criteria utilized for evaluating the performance of the employees across the several levels. For example, for the top level of management, scope and dimension of organizational growth and development, degree of achieving aims and objectives of the organization and factors of profitability and earnings through operations are considered. Similarly, for the middle level managers, the level of performance of the different units, collaboration among various departments, optimal utilization of scarce resources, and communicative efficiency with the higher authorities, are taken into consideration. On the other hand, for the lower level groups such as supervisors in the front lines, the considered criteria for implementing performance management are with respect to the quality and quantity of results or outputs and various other operational facts such as rate of accidents, absenteeism and many more (Billikop, 2006). Monitoring and Evaluation of Effectiveness of Performance Management Implementation It is essential to monitor and evaluate effectiveness of performance management after the program being implemented within the organization in order to monitor the effectiveness and limitations of the program. The best way to measure the program’s effectiveness is through stating as to whether the objectives of the program have been completely met. However, there has to be set objectives of the program for the employees and also for the Coca-Cola Company (The Coca-Cola Company, 2011). Measurement of the level of satisfaction of the managers and employees through program implementation is another effective approach for evaluating the program’s effectiveness. Identification of enhanced level of performance from the employees, departmental units and organization as a whole is also another measure for evaluating the program’s effectiveness. Measuring the changes in attitude of the managers and the employees also determines the effectiveness of performance management within organization. Finally, the related alterations in other programs of the human resource department inclined with the basics of the performance management program can also be effectively utilized for evaluating the effectiveness of the later (United States Office of Personnel Management, 1999). Communication of Performance Management Program to Employees Performance management program can best be communicated through generation of two-way communication between the employees and their respective supervisors. The supervisors should bring about clarity in their discussions and embrace with the employees so as to generate collaborative communication process between them. The mission, the aims, the goals, the main concerns and the outlook of the company are required to be made clear and precise by the supervisors. Employees should be adequately provided with the opportunity to put forward their problem areas where they are concerned of. This would help the supervisors in identifying the core performance areas of the employees and in turn, would add up to the performance enhancement of the employees. For effectively communicating the performance management program, the management of the organizations should strive for undertaking regular collaborative meeting between the supervisors and the employees (Indiana University, 2011). Inappropriateness of Performance Management Implementation The implementation of performance management program within Coca-Cola will be inappropriate if the organizational culture is such that it resists change (The Coca-Cola Company, 2011). Performance management is an evolved phenomenon of the modern environment with respect to the processes being followed. Therefore, there is a strong possibility that the employees would resist to this change as well in those organizational cultures. Hence, it is extremely required that the management comprehensively evaluates the organizational culture so as to identify its nature and form. This would be required for implementing processes through which the resisting nature of the employees can be eradicated. Implementing the performance management program in a resisting environment might worsen the present level of employees’ performance (Burton, Lauridsen and Obel, 1999). Impact of Performance Management Program upon HR Policies Performance management implementation has a direct indication towards reformation of HR policies of Coca-Cola (The Coca-Cola Company, 2011). Performance management can only be successfully implemented through inclination of its objectives with those of the organization. The impact of this phenomenon upon HR policies can be observed through the results of the process. The shortcomings of the employee performance can be taken into consideration for effectively designing policies aimed at improving the performances. The costs and benefits approach can also be effectively performed through evaluation of the results of the performance management program. The gap between costs and benefits can be then quantitatively considered for framing future effective policies for enhancing employee performance (The University of Western Australia, 2003). Conclusion Performance management has grown extremely important in the modern context of the fast pace world. The concept is perhaps the most essential phenomenon in the human resource department of the organization. However, it is essential that the organization become effective enough towards implementation of the process. Effective implementation will again be dependent upon exact identification of the organizational goals and objectives, both short term as well as long term. The inclination of the organizational objectives with those of the performance management program will ultimately provide success to the entire phenomenon. For measuring the successful implementation of performance management program, it is essential that the management undertakes various review programs. The results of the review programs can thus be utilized for framing effective compensation policies for the organization. References Asian Development Bank. (2011). Literature Review—Implementation of Results-Based Management. Retrieved from http://www.adb.org/Documents/Evaluation/BSES/Managing-Devt-Results/BSES-Bayley-App2.PDF Billikop, G. (2006). Performance Appraisal. Retrieved from http://cnr.berkeley.edu/ucce50/ag-labor/7labor/06.htm Burton, R. M., Lauridsen, J. and Obel, B. (1999). Tension and Resistance to Change in Organizational Climate: Managerial Implications for a Fast Paced World. Retrieved from http://openarchive.cbs.dk/bitstream/handle/10398/8129/8791023025.pdf?sequence=1 Indiana University. (2011). Performance Management. Retrieved from http://www.indiana.edu/~uhrs/training/performance_management/intro.htm Ripley, D. (2002). Improving Employee Performance: Moving Beyond Traditional HRM Responses. Retrieved from http://www.ispi.org/pdf/suggestedReading/Ripley.pdf Schuster, M. H. (2010). Aligning Compensation Strategy. Retrieved from http://www.chrs.net/images/chrs_papers/alcompst.pdf The Coca-Cola Company. (2011). Career Areas. Retrieved from http://www.thecoca-colacompany.com/careers/career_areas.html The Coca-Cola Company. (2011). Workplace Culture. Retrieved from http://www.thecoca-colacompany.com/citizenship/workplace_culture.html The Coca-Cola Company. Employee Engagement. Retrieved from http://www.thecoca-colacompany.com/citizenship/engagement.html The Coca-Cola Company. (2011). Mission, Vision & Values. Retrieved from http://www.thecoca-colacompany.com/ourcompany/mission_vision_values.html The University of Western Australia. (2003). Performance Management of Staff. Retrieved from http://www.hr.uwa.edu.au/policy/toc/performance_management_of_staff?childfx=on Turk, K. (2006). The Study of Performance Appraisal and Compensation in Estonian Public and Private Universities. Retrieved from http://www.isma.info/dosyalar/296487-96.pdf United States Office of Personnel Management. (1999). Evaluating Performance Appraisal Programs: An Overview. Retrieved from http://www.opm.gov/perform/wppdf/eval.pdf Read More