WHY MANAGE PERFORMANCE

Reasons why performance management is important.

• IDENTIFICATION OF ISSUE:  Less feedback for employees 

• APPLIED THEORY: Armstrong Theory

• PRACTICAL THEORY: Increase Performance by preparing employees

• LINKED THEORIES: Armstrong and Maslow's theory                   

• SOLUTION: Treating Organization as a system            

A performance management system is a crucial tool for organizations to align employee performance with organizational objectives, increase employee engagement, and adapt to changing business priorities. It involves goal management, continuous performance management, feedback, recognition, and data-driven insights. The system has evolved over time, with some modernizations due to advancements in technology. It focuses on employee evaluation and reward, with a shift towards a more holistic approach(Grundy et al. 2005).

Performance management software is beneficial for any company with an employee base, regardless of industry or size. The power user is the team leader or manager with direct reports. Employees work with their managers to define goals and participate in 360-degree review cycles. HR professionals define HR processes and systems that support the performance management cycle, ensuring fairness and timely execution(Lebas, 1995).

A performance management system is important for increased workforce productivity, higher employee engagement, lower turnover, and maximized revenue per employee. It also provides valuable insights that inform broader human capital management decisions. Best practices include consistency, transparency, and ongoing goal management, as well as implementing a culture of continuous improvement allows companies to optimize their processes and improve efficiency and productivity in the workplace. Performance management is a system that uses a set of goals and rewards to encourage team members to dedicate themselves to their work(Bititci et al. 2005)

                                                                MacMahon & Murphy, 1999)

Performance management systems should be unique and specific to an organization's values, goals, and purpose. They should encourage employees to meet objectives aligned with these goals, boosting business growth and supporting teams' performance, productivity, morale, and well-being. Performance appraisals are essential for companies to show support, offer training and development, and deliver reward and recognition. There are two main approaches to evaluating performance and managing talent progression: continuous performance management (Agile Performance Management) and traditional annual appraisals. Traditional annual appraisals are not effective due to extensive paperwork and backwards-looking nature. Agile performance management involves regular, year-round check-in meetings combined with frequent real-time feedback, aiming to improve performance on an ongoing basis. The importance of performance management lies in its ability to monitor staff and the business benefits of the continuous performance management cycle(Wahba & Bridwell, 1976).

Performance conversations have changed rapidly in the past couple of years. Recent research shows that employees aren’t responding to traditional performance appraisal systems. 55% say annual reviews don’t improve their performance. As a result, companies are modernizing their approach to improve performance appraisals(Freeman 1984).

Companies will also need to modernize how they manage their new strategies. That’s because it’s next to impossible to conduct a variety of strategic performance appraisals when you’re relying on paperwork. That’s likely the reason why performance management software use is also on the rise(Grundy et al. 2005).

Effective performance management is crucial for businesses to improve employee engagement, productivity, and retention. It involves engaging employees to review their workplace performance and development, gathering information through goal completion, feedback, and discussions. By analyzing successes, strengths, learning from mistakes, and examining potential for growth and development, businesses can enhance individual performance and weed out problems(Otley, 1999).

There are various performance management processes, tools, and approaches companies can use to inspire, motivate, and manage employees. Implementing an effective management system requires commitment and dedication from the human resources department, managers, and employees(Gruman & Saks, 2011). 

Performance appraisals are essential for companies to show support, offer training and development, and deliver rewards and recognition. There are two main approaches to evaluating performance and managing talent progression: continuous performance management (Agile Performance Management) and traditional annual appraisals(Agunis, 2015). 

Improve employee recruitment & selection process

Ensuring the recruitment process is managed effectively is one of the first steps you should take to improve your organisation. Employing the wrong people can cost you in both time and money. A bad candidate who fails to fit in with the team can disrupt the company culture and create a loss in productivity.

• Spend time perfecting the job description.

• Promote your company and make it an attractive place to work.

• Hire candidates based on the qualities you value in your staff.

• Use all of the tools available to you to find the best talent.

• Ask for feedback from candidates.

• Recruitment process and implement suggestions for improvement.

• Ensure that your recruitment process is fluid

Performance management involves continuous communication between management and employees, ensuring clear responsibilities, priorities, and tools for consistent performance, aligning success with organizational goals.Set SMART goals and performance metrics for employees, focusing on specific, easy-to-measure, relevant, and time-bound goals. Encourage active participation, discuss training, skill development, and identify improvement opportunities(Coase 1937).

REFLECTION 

Setting SMART goals, which are Specific, Measurable, Achievable, Realistic, and Timely, provides direction, motivation, and a clear focus, thereby increasing the chances of achieving the goal and guiding efforts. HRM, a part of management, has evolved over time due to the interrelationship between management and human resource management. The term "human resource management" emerged in the 1980s, referring to the management of skilled artisans and craftsmen in ancient civilizations. Slaves were a significant source of manpower, often sold and purchased like commodities. Management perspective offers insights into its construction process, design, and engineering, demonstrating the importance of organized program management. Scientific management has four core principles: scientifically determining the best way to perform a task, changing from a "rule of thumb," hiring the right workers, monitoring performance, and dividing work between management and labor for efficient execution.

Reference list 

Ferreira, A., & Otley, D. (2009). The design and use of performance management systems: An extended framework for analysis. Management Accounting Research, 20(4), 263–282. https://doi.org/10.1016/j.mar.2009.07.003  

Gruman, J. A., & Saks, A. M. (2011). Performance management and employee engagement. Human Resource Management Review, 21(2), 123–136. https://doi.org/10.1016/j.hrmr.2010.09.004

Otley, D. (1999). Performance management: a framework for management control systems research. Management Accounting Research, 10(4), 363–382. https://doi.org/10.1006/mare.1999.0115 

Van De Voorde, K., & Beijer, S. (2014). The role of employee HR attributions in the relationship between high‐performance work systems and employee outcomes. Human Resource Management Journal, 25(1), 62–78. https://doi.org/10.1111/1748-8583.12062 

Ventegodt, S., Merrick, J., & Andersen, N. J. (2003). Quality of Life Theory III. Maslow revisited. ˜the œScientific World Journal/TheScientificWorldjournal, 3, 1050–1057. https://doi.org/10.1100/tsw.2003.8

Wahba, M. A., & Bridwell, L. G. (1976). Maslow reconsidered: A review of research on the need hierarchy theory. Organizational Behavior and Human Performance, 15(2), 212–240. https://doi.org/10.1016/0030-5073(76)90038-6