Performance Management System - Literature review Example

Heading: Performance Management System Your name: Course name: Professors’ name: Date Introduction In the fast changing and competitive world, companies strive to develop effective human resources that facilitate the achievement of set goals. Companies do this through different performances review systems like the performance management and performance appraisals. Additionally, firms aspire to create a successful performance system to enable it achieve its objectives. Nevertheless, this cannot be achieved if managers constantly make errors in their evaluation processes. Therefore, this paper seeks to explore the difference between performance management and performance appraisal; successful versus unsuccessful performance system; and common errors committed, as well as their remedies. Performance management and Performance appraisal To begin with, Deb (2006, pp. 201-220) says that performance appraisal is one of the tasks that all managers dislike conducting in their organizations after people’s dismissal. Appraisals meetings are meant to pressurize managers due to the influence they apply on forthcoming occupational course of any worker concerned. Managers also dislike appraisals because of the connection many firms create between it and return, and for the responsibility of a judge or assessor that managers should perform in this situation. Generally, Venkateswara (2004, pp. 213-225) asserts that performance appraisal may be viewed as a process aimed at assessing and rating, or review workers’ performance. Relevant managers conduct appraisals annually, while the system’s design and certification routinely filled in performance evaluation meeting by managers is arranged by the human resource function. Because usually related to pay, this is the event in which organizational managers needed to act as judge, accounting to the top-down process. One of the aspects of improving performance is by performance appraisals. This is a crucial element of performance management, and a major feature of a firm’s life (Deb 2006, pp. 201-220). Performance appraisals are more than just a yearly ritual and they are seen as a main lever to improve business performance. According to Ittner, Larcker and Randall (2003, pp. 715-741), performance appraisal is the process of assessing the performance and evaluating the training or development needs of a worker. It can also be defined as a process of evaluating individual performance against pre-fixed objectives or criteria, involving the collection of information, at least one meeting, and some kind of report that can comprise of a performance rating. Ittner, Larcker and Randall (2003, pp. 715-741), further say that performance appraisal is a process that permits an individual employee’s general abilities and possibility to be evaluated to enhance their performance. Appraisal is not possible to be somewhat practical for small family business or a sole proprietorship. Performance appraisal is beneficial in organizations in a number of ways. To start with, appraisal may be a central part in ensuring that company members know what is anticipated of them; thus playing a critical role in the socialization of members to adopt to the firm’s culture (Venkateswara 2004, pp. 213-225). For instance, its value as a company socialization process is intimately linked to the business attempts to manage culture, which is one of the indispensable elements of the human resource management mechanism to the employment association. Bacal (2007, pp. 23-30) shows that increasingly firms are now employing performance management as a way of introducing cultural alterations in companies. Secondly, organizations use performance appraisal in the improvement of present performance. Thirdly, firms utilize performance appraisal offer feedback; that is the endorsement and conformation that businesses are on the right, and direct or advise others on better ways of doing things. Additionally, organizations use performance appraisals to enhance motivation; identify potential; and identify development and training needs. Besides, Bacal (2007, pp. 23-30) says that businesses use performance appraisal to emphasize on professional development and sequence planning. In addition, performance appraisal is useful in letting individuals to be aware of the company’s expectations on them; as well as evaluating the selection process’s efficiency. This system is also employed in rewarding salary performance or increases associated pay. Performance appraisal is used in solving job problems, and setting objectives based on SMART model; specific, measurable achievable, realistic, and time-bound. What is more, Ittner, Larcker and Randall (2003, pp. 715-741) hold that performance appraisal comprises of evaluation and job standards of the previous performance. It is understood that the assessment is performed on the basis of pre-determined occupation standards. Additionally, performance appraisal is kind of present technique or mechanism assessing either the firm’s or employees’ performance. Performance appraisal is also different from performance management in that it is occasionally used. Besides, performance appraisal is a more structural and official in nature. Performance appraisal is also more standardized on the basis of designation of the firm’s employee (Bacal 2007, pp. 23-30). On the other hand, Krausert (2009, pp. 120-130) argues that performance management is an ancient way of evaluating employee’s performance. The enhanced economic competitiveness and fast changes in the external setting has compelled numerous firms to move away from reactive performance appraisals to a more proactive performance management to promote productivity and advance firm’s performance. As Kaplan and Norton (2001, pp. 147-160) report, performance management is a constant and progressive proactive approach to manage the employee’s performance and ensure that workers achieve their targets on an actual time basis, without evaluations or corrective actions in future. In terms of approach, in performance management, the supervisor or the manager acts as a mentor or a coach. Performance management is a reasonably more flexible and casual technique of assessing workers’ performance. Additionally, Deb (2006, pp. 201-220) says that performance management is still customized for individual employee’s actual work compared to performance appraisal that is commonly standardized based on worker’s designation. In terms of advantages, performance management facilitates real-time alters to promote productivity. The actual-time performance monitoring and correcting enhances worker performance much better in comparison with the appraisal system. Performance management also facilitates for connection of performance to both short-term and long-term corporate objectives. As Krausert (2009, pp. 120-130) reports, performance management is also instrumental in focusing on real outcomes and on-the-job performance to enhance team work. The system also aids in the effective enforcement of Total Quality Management. Additionally, performance differs from performance appraisals as it focuses on the real performance, rather than past performance memories. It also removes stress emerging from the imminent appraisals. Moreover, performance management is crucial as it concentrates on instant and most pertinent concerns as compared to performance appraisals. Successful versus unsuccessful performance system According to Delpo (2007, pp. 13-20), a successful management system refers to the system in which the organization defines its goals clearly. This implies the firm should set its individual goals and align them with its corporate strategy. In a successful system, goal setting ought to be a joint process between employees and the management. Upon the establishment of a corporate strategy, it is vital to create individual goals that support the employees’ big picture. The set goals should be based on the SMART model; specific, measurable, achievable, relevant, and timely. On the other hand, unsuccessful performance system is the one that neither defines its goals clearly, nor aligns them with its company strategy. Secondly, Delpo (2007, pp. 13-20) demonstrates that a successful performance system is the one that monitors progress on goals. In such a system, managers require to know about their employees’ progress on set goals to help with coaching or resources whenever they miss their goal targets. This is also influential in the acknowledgement of successes with proper financial or non-financial awards. Additionally, Krausert (2009, pp. 120-130) maintains that managers must review workers’ productivity, and the employees should monitor their own development on goals. The right information is crucial in the evaluation process, as it informs the management on the suitable steps taken to realize a goal. Therefore, unlike an unsuccessful performance system, managers in a successful performance system evaluate both team and individual goals at least once a month or a week to clarify their focus and apply the information as a foundation for information discussions. Thirdly, Krausert (2009, pp. 120-130) argues that successful performance system conducts appraisal processes, while unsuccessful management system does not. In a successful performance system, managers listen, observe, provide positive feedback, and provide recognition. Majority of performance management solutions are coaching and writing assistance to aid managers use appropriate terms in constructive worker performance. Management’s listening, observation, and provision of constructive feedback is beneficial for both organization’s and employees’ health. This is because workers develop loyalty to the firm that enhances talent, and make them more engaged in their work. These development programs are also vital in allowing the firm to form a collection of talents for its strategic sequence planning. Fourthly, Kennerley and Neely (2003, pp. 213-229) hold that a successful performance system involves the one with a pay-for-performance reward strategy as its major way of retaining leading talent and propelling the firm’s performance that supersedes all expectations. Pay-for-performance is vital in aligning employees with objectives and goals of the firm, as well as motivating and rewarding its top performance. This also helps in the consistent development of under performers into valuable organization assets. On the other hand, unsuccessful performance system lacks a proper strategy of recognizing, rewarding, and developing its employees. Fifthly, Delpo (2007, pp. 13-20) asserts that a successful performance system involves discussion between managers and workers on effective ways of improving performance. Some human resource specialists assert that it is more efficient to keep a consistent and open dialog on performance. Unlike in unsuccessful performance system, managers in a successful system know that the best performance evaluation is a progressive one, in which they collaborate with workers to ensure that they perform their tasks effectively. Such regular discussions between managers and staff members are advantageous in enabling workers cope with changing company objectives so that they shift fast and adjust to priority accordingly. Lastly, a successful performance system carries out worker development and enhancement activities, emphasizing on specific skills or attributes the firm most needs to recognize and award. These could be teamwork, productivity, or innovativeness. For success, such systems ensure that the processes are neither punitive nor threatening, but provide direction and chance for career development. As Delpo (2007, pp. 13-20) holds, effective evaluation should entail a plan for workers’ development by outlining areas needing extra training, establishment of priorities, setting new goals, and mapping a course to a pay increase or promotion, and giving details on target goals. On contrast, unsuccessful performance system does not strive to develop employees’ development and enhancement (Deb 2006, pp. 201-220). Common errors made in performance management and elimination To start with, managers are likely to make false attribution during performance evaluation in their firms. This refers to a tendency to attribute undesirable performance to internal reasons and favorable performance to external sources (Mathis & Jackson 2010, pp. 347-350). Here, managers tend to attribute employees’ great performance to outside help, and poor performance to workers’ mistakes like procrastination. Besides, Pulakos (2009, pp. 65-70) notes that halo effect is another mistake experienced during performance evaluation. This implies to a situation in which managers form positive impressions of an employee’s competence in some area, and offers high marks throughout the criteria. This is due to the fact that humans see other attributes a more significant than others. As Smither (2009, pp. 100-120) puts it, another common error in performance review is leniency error, which is a tendency of a manager to rate a worker higher than his performance level. This could be due to avoidance of confrontations. Furthermore, perceived meaning is another common mistake in performance evaluation. This is problematic when managers fail to agree on the implication of a rating strategy. For instance, while one manager might view a worker’s consistent reporting of challenges as initiative, another manager might find it as a sign of reliance on supervisory help, rather than initiative. What is more, Mathis and Jackson (2010, pp. 347-350) note that recency error also occurs when a manager applies latest events to measure an employee due to improper documentation of worker’s performances. Severity errors also happen when a manager rates an employee above his normal performance. Lastly, stereotyping implies the use of similar generalizations to entire members of particular social groups. Gender stereotyping is one of the most stereotyping cases in workplace (Pulakos 2009, pp. 65-70). Smither (2009, pp. 100-120) says that in order to effectively eliminate these errors in an organization, managers should rate their employees appropriately, fairly, and openly. This will help reduce chances of committing severity, leniency, and stereotyping errors. It is also imperative that managers ensure proper documentation of workers’ performance so as to avoid recency errors during performance review process. Additionally, there ought to a criteria for common perceptions so as to eliminate perceived meaning mistake. Managers should also ensure that they appropriately make attributions so as to boost employees’ performance. Conclusion Performance evaluation is vital in every organization that seeks to succeed. Success is brought about by the performance system that a company chooses like performance appraisal and performance management. Performance management is casual, flexible, customized to individual worker’s work, supervisor is a mentor or coach, consistent, progressive proactive strategy, and allows for connection of short-term and long-term goals. On contrast, performance appraisal is a restricted, reactive function, part of general performance system, and official and structured. Successful performance system has clearly defined goals, a pay-for-performance reward, discussions between management and workers, monitors progress on goals, and conducts worker development and enhancement plans. Some of the errors committed include renency, severity, stereotyping, and leniency. Therefore, there is need for fairness, appropriate rating, common rating criteria, and proper documentation of workers’ performance. References Bacal, R 2007, How to Manage Performance, McGraw-Hill, New York. Pp. 23-30. Deb, T 2006, Strategic Approach to Human Resource Management, Atlantic Publishers & Distributors (P) Ltd, New York. Pp. 201-220. Delpo, A 2007, The Performance Appraisal Handbook: Legal & Practical Rules for Managers, Nolo, Berkeley. Pp. 13-20. Ittner, C, Larcker, D & Randall, T 2003, 'Performance Implications of Strategic Performance Measurement in Financial Service Firms', Accounting, Organizations and Society, vol. 28, no. 7-8, pp. 715-741. Kaplan, RS & Norton, DP 2001, 'Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Part II', Accounting Horizons, vol. 15, no. 2, pp. 147-160. Kennerley, M & Neely, A 2003, 'Measuring Performance in a Changing Business Environment', International Journal of Operations & Production Management, vol. 23, no. 2, pp. 213-229. Krausert, A 2009, Performance Management for Different Employee Groups: a Contribution to Employment Systems Theory, Physica-Verlag HD, New York. Pp. 120-130. Mathis, R & Jackson, J 2010, Human Resource Management, South-Western College Pub, Cincinnati. Pp. 347-350. Pulakos, E 2009, Performance Management: a New Approach for Driving Business Results, Wiley-Blackwell, Hoboken. Pp. 65-70. Smither, J 2009, Performance Management Putting Research into Practice, Epub Edition, John Wiley & Sons Inc. Hoboken. Pp. 100-120. Venkateswara, R 2004, Performance Management and Appraisal Systems, Response Books, a division of Sage Publications, New Delhi. pp. 213-225 Read More