Performance management

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Performance management (PM) is the process of ensuring that a set of activities and outputs meets an organization's goals in an effective and efficient manner. Performance management can focus on the performance of an organization, a department, an employee, or the processes in place to manage particular tasks. [1] Performance management standards are generally organized and disseminated by senior leadership at an organization and by task owners, it can include specifying tasks and outcomes of a job, providing timely feedback and coaching, comparing employee's actual performance and behaviors with desired performance and behaviors, instituting rewards, etc. [2] It is necessary to outline the role of each individual in the organization in terms of functions and responsibilities to ensure that performance management is successful. [3]

Contents

Application

Performance management principles are used most often in the workplace and can be applied wherever people interact with their environments to produce desired effects—schools, churches, community meetings, sports teams, health settings, [4] governmental agencies, social events, and even political settings.

The way performance management is applied is important in getting the most out of the group. It can have a positive impact on how employees perform on a day-to-day basis. In order to avoid a negative impact, it must be applied in a way that does not encourage internal competition, but rather teamwork, cooperation, and trust. [5] This is done through an implementation process of clarifying the work that has to be done, setting goals and establishing a performance plan, frequently providing coaching, conducting a formal review, and recognizing and rewarding top performance.

Managers use performance management to align company goals with the goals of teams and employees in an effort to increase efficiency, productivity, and profitability. [6] Performance management guidelines stipulate clearly the activities and outcomes by which employees and teams are evaluated during performance appraisal. [7]

To apply performance management principles, a commitment analysis is completed first to create a mission statement for each job. The mission statement is a job definition in terms of purpose, customers, product, and scope. This analysis is used to determine the continuous key objectives and performance standards for each job position.

Following the commitment analysis is the work analysis of a particular job in terms of the reporting structure and job description. If a job description is not available, then a systems analysis is completed to create a job description. This analysis is used to determine the continuous critical objectives and performance standards for each job.

Werner Erhard, Michael C. Jensen, and their colleagues developed a new approach to improving performance in organizations. Their model is used to stress how the constraints imposed by one's own worldview can impede cognitive abilities that would otherwise be available. Their work delves into the source of performance, which is not accessible by mere linear cause-and-effect analysis. They assert that the level of performance people achieve correlates with how work situations occur to them and that language (including what is said and unsaid in conversations) plays a major role in how situations occur to the performer. They assert that substantial gains in performance are more likely to be achieved by management understanding how employees perceive the world and then encouraging and implementing changes that make sense to employees' worldview. [8]

Benefits of performance management

Managing employee or system performance and aligning their objectives facilitates the effective delivery of strategic and operational goals. Some proponents argue there is a clear and immediate correlation between using performance management programs or software and improved business and organizational results.[ citation needed ] In the public sector, the effects of performance management systems have differed from positive to negative, suggesting that differences in the characteristics of performance management systems and the contexts into which they are implemented play an important role to the success or failure of performance management. [9] [10]

For employee performance management, using integrated software, rather than a spreadsheet-based recording system, may deliver a return on investment through a range of direct and indirect sales benefits, operational efficiency benefits, and by unlocking the latent potential in every employee workday (i.e., the time they spend not actually doing their job). Benefits may include:

Direct financial gain
Motivated workforce
Improved management control

How performance management can fail

Managers who are not clear in their expectations may end up with employees who believe that have been doing a great job, when they have been doing something other than what has been asked of them. Animal job interview.jpg
Managers who are not clear in their expectations may end up with employees who believe that have been doing a great job, when they have been doing something other than what has been asked of them.

Employees who question how fair the performance management system is will discredit its effectiveness. An example of this would be a high level of internal competition within the performance management system. This will cause those who do not get rewarded to be disgruntled with the process. Additionally, without proper implementation in the planning of the performance management system, employees may view the process as something they must have compliance with. This will result in a less proactive and more inaccurate representation of the performance of an employee. [11] Managers are expected to take performance management seriously, and without effective management the overall functionality of the program will be lacking. A well-managed, well-constructed plan can be beneficial for companies and employees, but the system is not perfected.

Organizational development

In organizational development (OD), performance can be thought of as Actual Results vs Desired Results. Any discrepancy, where Actual is less than Desired, could constitute the performance improvement zone. Performance management and improvement can be thought of as a cycle:

  1. Performance planning where goals and objectives are established
  2. Performance coaching where a manager intervenes to give feedback and adjust performance
  3. Performance appraisal where individual performance is formally documented and feedback delivered

A performance problem is any gap between Desired Results and Actual Results. Performance improvement is any effort targeted at closing the gap between Actual Results and Desired Results.

Other organizational development definitions are slightly different. The U.S. Office of Personnel Management (OPM) indicates that Performance Management consists of a system or process whereby:

  1. Work is planned and expectations are set
  2. Performance of work is monitored
  3. Staff ability to perform is developed and enhanced
  4. Performance is rated or measured and the ratings summarized
  5. Top performance is rewarded [12]

In companies

Performance management is the term used to refer to activities, tools, processes, and programs that companies create or apply to manage the performance of individual employees, teams, departments, and other organizational units within their organizational influence. In contrast, performance appraisal refers to the act of appraising or evaluating performance during a given performance period to determine how well an employee, a vendor or an organizational unit has performed relative to agreed objectives or goals, and this is only one of many important activities within the overall concept of performance management. Many people equate performance management with performance appraisal. This is a common misconception.

At the workplace, performance management is implemented by employees with supervisory roles. Normally, the goal of managing performance is to allow individual employees to find out how well they had performed relative to performance targets or key performance indicators (KPIs) during a specific performance period from their supervisors and managers.

An organization wide 360 process that is integrated into its culture can be a powerful tool for communicating and instituting change, rapidly touching all members of the organization when new markets, strategies, values and structures are introduced into the system [13]

Organizations and companies typically manage employee performance over a formal 12-month period (otherwise known as the formal company performance period).

The results of performance management exercises are used in:

Each year companies spend millions on their performance management systems. In order for performance management to be successful, businesses must continue to adapt their system to correct their current deficiencies. Some aspects may resonate more with employees compared to others (e.g., goal setting or performance bonuses). [14] Effective management will set up a performance management system that is distinctive and consistent. The goal is to continue to alter the system to have higher employee engagement and increase their employees’ performance at work. In turn, companies hope this results in less turnover and creates a better workplace environment.

See also

Related Research Articles

Human resources is the set of people who make up the workforce of an organization, business sector, industry, or economy. A narrower concept is human capital, the knowledge and skills which the individuals command. Similar terms include manpower, labor, personnel, associates or simply: people.

Organization development (OD) is the study and implementation of practices, systems, and techniques that affect organizational change. The goal of which is to modify an organization's performance and/or culture. The organizational changes are typically initiated by the group's stakeholders. OD emerged from human relations studies in the 1930s, during which psychologists realized that organizational structures and processes influence worker behavior and motivation. More recently, work on OD has expanded to focus on aligning organizations with their rapidly changing and complex environments through organizational learning, knowledge management, and transformation of organizational norms and values. Key concepts of OD theory include: organizational climate, organizational culture and organizational strategies.

Team building Term for activities used to enhance social relations and define roles within teams

Team building is a collective term for various types of activities used to enhance social relations and define roles within teams, often involving collaborative tasks. It is distinct from team training, which is designed by a combine of business managers, learning and development/OD and an HR Business Partner to improve the efficiency, rather than interpersonal relations.

Performance improvement is measuring the output of a particular business process or procedure, then modifying the process or procedure to increase the output, increase efficiency, or increase the effectiveness of the process or procedure.

A performance appraisal, also referred to as a performance review, performance evaluation, (career) development discussion, or employee appraisal is a method by which the job performance of an employee is documented and evaluated. Performance appraisals are a part of career development and consist of regular reviews of employee performance within organizations.

A 360-degree feedback is a process through which feedback from an employee's subordinates, colleagues, and supervisor(s), as well as a self-evaluation by the employee themselves is gathered. Such feedback can also include, when relevant, feedback from external sources who interact with the employee, such as customers and suppliers or other interested stakeholders. 360-degree feedback is so named because it solicits feedback regarding an employee's behavior from a variety of points of view. It therefore may be contrasted with "downward feedback", or "upward feedback" delivered to supervisory or management employees by subordinates only.

Goal setting involves the development of an action plan designed in order to motivate and guide a person or group toward a goal. Goals are more deliberate than desires and momentary intentions. Therefore, setting goals means that a person has committed thought, emotion, and behavior towards attaining the goal. In doing so, the goal setter has established a desired future state which differs from their current state thus creating a mismatch which in turn spurs future actions. Goal setting can be guided by goal-setting criteria such as SMART criteria. Goal setting is a major component of personal-development and management literature. Studies by Edwin A. Locke and his colleagues, most notably Gary Latham, have shown that more specific and ambitious goals lead to more performance improvement than easy or general goals. The goals should be specific, time constrained and difficult. Difficult goals should be set ideally at the 90th percentile of performance assuming that motivation and not ability is limiting attainment of that level of performance. As long as the person accepts the goal, has the ability to attain it, and does not have conflicting goals, there is a positive linear relationship between goal difficulty and task performance.

Business process re-engineering

Business process re-engineering (BPR) is a business management strategy, originally pioneered in the early 1990s, focusing on the analysis and design of workflows and business processes within an organization. BPR aimed to help organizations fundamentally rethink how they do their work in order to improve customer service, cut operational costs, and become world-class competitors.

Competence is the set of demonstrable characteristics and skills that enable and improve the efficiency or performance of a job. The term "competence" first appeared in an article authored by R.W. White in 1959 as a concept for performance motivation. In 1970, Craig C. Lundberg defined the concept in "Planning the Executive Development Program". The term gained traction when in 1973, David McClelland wrote a seminal paper entitled, "Testing for Competence Rather Than for Intelligence". It has since been popularized by Richard Boyatzis and many others, such as T.F. Gilbert (1978) who used the concept in relationship to performance improvement. Its use varies widely, which leads to considerable misunderstanding.

The following outline is provided as an overview of and topical guide to management:

Control is a function of management which helps to check errors in order to take corrective actions. This is done to minimize deviation from standards and ensure that the stated goals of the organization are achieved in a desired manner.

Organizational behavior management (OBM) is a subdiscipline of applied behavior analysis (ABA), which is the application of behavior analytic principles and contingency management techniques to change behavior in organizational settings. Through these principles and assessment of behavior, OBM seeks to analyze and employ antecedent, influencing actions of an individual before the action occurs, and consequence, what happens as a result of someone’s actions, interventions which influence behaviors linked to the mission and key objectives of the organization and its workers. Such interventions have proven effective through research in improving common organizational areas including employee productivity, delivery of feedback, safety, and overall morale of said organization.

Training and development involves improving the effectiveness of organizations and the individuals and teams within them. Training may be viewed as related to immediate changes in organizational effectiveness via organized instruction, while development is related to the progress of longer-term organizational and employee goals. While training and development technically have differing definitions, the two are oftentimes used interchangeably and/or together. Training and development has historically been a topic within applied psychology but has within the last two decades become closely associated with human resources management, talent management, human resources development, instructional design, human factors, and knowledge management.

Personnel Psychology is a subfield of Industrial and Organizational Psychology. Personnel psychology is the area of industrial/organizational psychology that primarily deals with the recruitment, selection and evaluation of personnel, and other job aspects such as morale, job satisfaction, and relationships between managers and workers in the workplace. It is the field of study that concentrates on the selection and evaluation of employees; this area of psychology deals with job analysis and defines and measures job performance, performance appraisal, employment testing, employment interviews, personnel selection and employee training, and human factors and ergonomics.

Performance rating is the step in the work measurement in which the analyst observes the worker's performance and records a value representing that performance relative to the analyst's concept of standard performance.

In an organization, communication occurs between members of different hierarchical positions. Superior-subordinate communication refers to the interactions between organizational leaders and their subordinates and how they work together to achieve personal and organizational goals Satisfactory upward and downward communication is essential for a successful organization because it closes the gap between superior and subordinates by increasing the levels of trust, support, and the frequency of their interactions.

Work motivation "is a set of energetic forces that originate both within as well as beyond an individual's being, to initiate work-related behavior, and to determine its form, direction, intensity, and duration." Understanding what motivates an organization's employees is central to the study of I–O psychology. Motivation is a person's internal disposition to be concerned with and approach positive incentives and avoid negative incentives. To further this, an incentive is the anticipated reward or aversive event available in the environment. While motivation can often be used as a tool to help predict behavior, it varies greatly among individuals and must often be combined with ability and environmental factors to actually influence behavior and performance. Results from a 2012 study, which examined age-related differences in work motivation, suggest a "shift in people's motives" rather than a general decline in motivation with age. That is, it seemed that older employees were less motivated by extrinsically related features of a job, but more by intrinsically rewarding job features. Work motivation is strongly influenced by certain cultural characteristics. Between countries with comparable levels of economic development, collectivist countries tend to have higher levels of work motivation than do countries that tend toward individualism. Similarly measured, higher levels of work motivation can be found in countries that exhibit a long versus a short-term orientation. Also, while national income is not itself a strong predictor of work motivation, indicators that describe a nation’s economic strength and stability, such as life expectancy, are. Work motivation decreases as a nation’s long term economic strength increases. Currently work motivation research has explored motivation that may not be consciously driven. This method goal setting is referred to as goal priming. Effects of primed subconscious goals in addition to goals that are consciously set related to job performance have been studied by Stajkovic, Latham, Sergent, and Peterson, who conducted research on a CEO of a for-profit business organization using goal priming to motivate job performance. Goal priming refers to the achievement of a goal by external cues given. These cues can affect information processing and behaviour the pursuit of this goal. In this study, the goal was primed by the CEO using achievement related words strategy placed in emails to employees. This seemingly small gesture alone not only cost the CEO very little money, but it increased objectively measured performance efficiency by 35% and effectiveness by 15% over the course of a 5 day work week. There has been controversy about the true efficacy of this work as to date, only four goal priming experiments have been conducted. However, the results of these studies found support for the hypothesis that primed goals do enhance performance in a for-profit business organization setting.

Employee motivation is an intrinsic and internal drive to put forth the necessary effort and action towards work-related activities. It has been broadly defined as the "psychological forces that determine the direction of a person's behavior in an organisation, a person's level of effort and a person's level of persistence". Also, "Motivation can be thought of as the willingness to expend energy to achieve a goal or a reward. Motivation at work has been defined as 'the sum of the processes that influence the arousal, direction, and maintenance of behaviors relevant to work settings'." Motivated employees are essential to the success of an organization as motivated employees are generally more productive at the work place.

Reward management is concerned with the formulation and implementation of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization.

Employee recognition is the timely, informal or formal acknowledgement of a person's behavior, effort, or business result that supports the organization's goals and values, and exceeds his superior's normal expectations. Recognition has been held to be a constructive response and a judgment made about a person's contribution, reflecting not just work performance but also personal dedication and engagement on a regular or ad hoc basis, and expressed formally or informally, individually or collectively, privately or publicly, and monetarily or non-monetarily.

References

  1. Harris, Hilary; Brewster, Chris; Sparrow, Paul (2003). International Human Resource Management. CIPD Publishing. ISBN   9780852929834.
  2. "Performance Management". U.S. Office of Personnel Management. Retrieved 2019-02-28.
  3. "Performance Management". 2020-11-12.
  4. Mettler T, Rohner P (2009). Performance management in health care: The past, the present, and the future (PDF). International Conference Business Informatics. Vienna. pp. 699–708.
  5. Smith, Marisa; Bititci, Umit Sezer (2017-09-04). "Interplay between performance measurement and management, employee engagement and performance". International Journal of Operations & Production Management. 37 (9): 1207–1228. doi:10.1108/ijopm-06-2015-0313. ISSN   0144-3577.
  6. Zaffron, Logan, Steve, David (Feb 2009). Performance Management: The Three Laws of Performance: Rewriting the Future of Your Organization and Your Life (1st ed.).
  7. "Performance". U.S. Office of Personnel Management. Retrieved 2019-02-28.
  8. Madden, Bartley J. (September 2014). Reconstructing Your Worldview. Learning What Works Inc. p. 99. ISBN   978-0988596931.
  9. Nielsen, Poul A. 2014. "Performance Management, Managerial Authority, and Public Service Performance." Journal of Public Administration Research and Theory. 24(2):431–458.
  10. Gerrish, Ed. 2015. "The Impact of Performance Management on Performance in Public Organizations: A Meta-Analysis." Public Administration Review 76(1):48–66.
  11. Peacock, M., Stewart, E. B., & Belcourt, M. (2020). Managing Employee Performance. In Understanding human resources management: A Canadian perspective (pp. 211-239). Toronto: Nelson Education.
  12. A Handbook for Measuring Employee Performance, by the US Office of Personnel Management
  13. Bracken,D., & Rose,D.” When does 360-degree feedback create behavior change? And how would we know it when it does? Journal of Business and Psychology”,26(2), 183-192
  14. Kakkar, Shiva; Dash, Sanket; Vohra, Neharika; Saha, Surajit (2020-04-23). "Engaging employees through effective performance management: an empirical examination". Benchmarking: An International Journal. 27 (5): 1843–1860. doi:10.1108/bij-10-2019-0440. ISSN   1463-5771.

Further reading