Impact of Performance Management on performance
What is performance management?
Performance Management (PM), is the process of identifying, developing and measuring the performance of teams and individuals of an organization (Aguinis, 2005). As per Brumbach (1988) performance means both behaviours and results. Many evaluation methods have been introduced in the early centuries, but the merit basis system was developed in the 20th century (Armstrong and Baron 1998).
Performance Management Cycle
Fig 01. The performance management cycle (Deming, 1986)
Deming (1986) explained his plan-do-check-act model. According to him, performance management is a natural process and not a technique or a tool. The cycle has four stages as described below.
- Performance planning-Expectations are defined on role profiles of knowledge, skills and abilities (KSAs). What need to be achieved are the objectives. The importance of planning is to align the individual goals with the company goals. This may include learning and development activities like e-learning, coaching, mentoring and project work.
- Performance act-Employees need to act according to the roles within the principles. Actions need to be taken to implement performance.
- Performance monitoring-Performance should be measured consistently. Feedbacks should be provided for employees to achieve their goals. Monitoring should be done throughout the year and its contrasts with the traditional appraisal system.
- Performance review-Achievements of the employees toward the goals should be assessed. It provides information on performance and development issues.
Impact on performance
Performance management creates a culture to achieve high performance. While achieving personal goals performance management lead to achieving company goals. The key performance indicators (KPI) of individuals are aligned with organizational performance. Research by Latham and Locke (1979) emphasis improvement of the performance of workers after setting goals in their work.
Jones et al (1995) defined performance management contributors as shared vision, define individual requirements, provide frameworks, provide systems and help people with uncertainty. McDonald and Smith (1991) point out the successful companies are those who are managing employee performance.
Global Context
Some organizations already decided to skip the performance management process with the crisis. Those who practised reviewing performance more than once per year didn't carry out any for the last year. It is vital for organizations to improve the performance management process. Many performance plans are no longer relevant as projects were cancelled and new goals have to be set with the changing environment. Managers couldn't monitor the performance as employees working remotely. Organizations around the globe tend to adopt modern performance practices including personalised, on-demand, data-driven feedbacks, and strong cooperation with the team. Eskildsen and Kristensen (2006) in their research point out new research, methodologies are needed in the modern world.
Conclusion
Performance management improves leadership, boost productivity and employee engagement. Those employees bring better results to the organizations as well to themselves by actively engaging in work. Performance management helps the organization with employee retention, productivity and achieving strategic goals.
References
Aguinis, H. (2005) Performace Management. Upper Saddle River: Pearson Education.
Armstrong, M. and Baron, A. (1998) 'Performance management: The new realities', London: CIPD.
Brumbach, G.(1988) 'Some ideas, issues and predictions about performance management, Public Personnel Management, Winter, pp.387-402.
Deming, E. (1986) Out of the crisis. Cambridge: Massachusetts Institute of Technology.
Eskildsen, J. and Kristensen, K.(2006) 'Enhancing importance-performance analysis', International Journal of Performance Management, 55, pp. 40-60.
Jones, P., Palmer, J., Whitehead, D and Needham, P. (1995) 'Prisms of performance', The Ashridge Journal, 04, pp. 10-14.
Latham, G. and Locke, E. (1979) 'Goal setting -A motivational technique that works', Organizational Dynamics, Autumn, pp 442-47.
McDonald, D. and Smith, A. (1991) 'A proven connection: performance management and business results, Compensation and Benefits Review, 2, pp. 47-55.
Commercial Bank of Ceylon PLC conjointly uses performance appraisal to judge their workers. They assess the performance of the staff doubles a year. PLC uses a 360-degree feedback system to judge the performance of the staff. Another feedback is given by line managers and Country managers.
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ReplyDeleteperformance management also encourages employees to be more involved, giving them the autonomy to set goals relevant to them, their strengths and organisational goals — thus providing employees with added ownership and motivation. All of this will help them take control of their performance.
ReplyDeleteI agree with you Ranjana. In recent past there were much discussions on productivity, engagement, and performance. All these are inter-related. More engaged are more productive and make better performance. Performance management plays an important role in motivating employees. A simple praise on improvement of the performance is definetly a motivating factor for an employee.
DeleteI agree with you Ranjana. In recent past there were much discussions on productivity, engagement, and performance. All these are inter-related. More engaged are more productive and make better performance. Performance management plays an important role in motivating employees. A simple praise on improvement of the performance is definetly a motivating factor for an employee.
DeleteMost of the public limited companies uses the 360-degree performance appraisal method. There are much more which affect the performance of the individual workers and the overall growth of the company.
ReplyDeleteSo proper strategies should be implemented by the employers and the employees to get the best possible results.
Good article Maduka.
ReplyDeleteI think KPI's are very popular among both organisations as well as employees. Performance management started to reward the employees and increase the employee engaments with the organisations.
I think it's very important for employees to know about the KPI related to their jobs and awareness creates better performance with the employer Expectations. By practicing it employer and employee both can become successful in the Business world.
ReplyDeleteSmart organizations pair their performance management with an incentive management process. The two systems have a lot in common, from defining roles and setting goals to reviewing and rewarding employee behavior, and as such, do very well when run simultaneously.