Performance management is critically evaluated and presented in this chapter. This evaluation starts with the arguments regarding the significance of performance management, and then proceeds with the conversation relating its intrinsic procedure and main points, linked with it and it complete with the analysis of this kind of processes as well as their contribution for organization. By going through this evaluation process, an approach is determined to analyze why PMS (Performance Management Systems) is adopted by organizations and to find out the challenges an organization experiences while attaining the goals, enhancing the organizational and individual performance.
A systematic way used for the betterment of performance of an organization by enhancing the team’s and individual’s performance is called as performance management (Armstrong, 2012). To find out the organizational goals, standards of performance, give feedback of performance, assess the work, find out the needs for training and allocate rewards, system of performance management is adopted by organizations (Claus & Briscoe, 2008). Performance management, performance development, performance planning, performance reward and performance review are included in the process of performance management (Deb, 2009).
Performance management’s theoretical base
Motivational theory, especially expectancy theory and goal setting theory are the fundamental theoretical basics for performance. It is hypothesized by expectancy theory that behavior of an individual is changes in accordance with their probability of fulfilling their attainable specific goals (Vroom, 1964). It is suggested by the goal setting theory (Latham & Locke, 1984) that performance and motivation can not only be enhanced by just assigning the specific goals to individuals but increasing the difficulty or challenges of goals are also required for acquiring the accepted performance. For PMS, both the above mentioned theories are essential to execute and these theories are explored in the later sections of this chapter. The basis for the foundation of both expectancy theory and goal setting theory is the individualistic, calculative and rational way of thinking of persons (Clark, 1998).
Certainly, it is argued that organizational instructive and rationalistic views are the basis of performance management. It is assumed under these views that along with the clear explanation of strategy, results of HR process could also be structured in such a method that their association with the strategic objectives of organization becomes clear. It is also argued that connecting links are there is this approach, among the varying segments of this process that could be frequently recognized and allow the loss of performance in wither one or more segments of this process to be organized in order to make sure best possible performance of the broad PMS. Though, discussion regarding the nature and formulation of the strategy is ignored under such assumptions (Mintzberg, 1994), but these are also not successful in identifying the circumstance under which a PMS functions. For the success and operation of such system, social process and the power system under which an organization functions along with wider country-culture and organizational context are vital arbitrating elements (Clark, 1998).
Processes of Performance Management
However, no standard model is there for performance management, but it is suggested by the practices and a literature review that lots of elements are there that might be present in the PMS. Generally, these elements are considered to be the presenting factors (IDS, 2003) for performance management cycle. Generally, formal appraisal and objective-setting systems are placed at the main points of this cycle by performance management models and it is suggested by literature that cultural background mainly affect these two areas (Millimanet al, 1998; Lindholmet al, 1999; Fletcher and Perry, 2001). Figure 2 is depicting a classic cycle
The function of goals/ objectives
This cycle typically starts with the process of performance planning where objectives of an individual are associated with the goals of organization and generally goal-setting happens in accordance with yearly standard evaluation cycles (Tahvanainen and Suutari, 2002). Sometimes, these objectives are stated as KRA (Key Result Accountabilities or Areas and supported by performance measures and performance standards. Nature of objectives as well as the way of expressing and defining them has been focused by the theory plus practice both (Mitchell et al, 2000). It is argued by Clark in 1998 that even though both expectancy theory and goal-setting theory highlight the significance of locating a minute amount of moderately real objectives, this might be hard to attain in reality as either strategic goals of organization are lacking or their inherent instability, absolute volume or diversity are lacking (Fenwick, 2004).
It is not itself sufficient to define the objectives. An understanding and agreement need to there, regarding the measurement of performance and it might be problematic. A discussion was organized on that level where performance goals are measurable, ‘hard’, and easy to be measured, or ‘soft’ plus concentrating on traits and behavior. There are several organizations using utilizing combination of and hard goals. Effect of cultural context and particular national might be reflected in nature of set of goals set, and precise cultural dissimilarities have been recognized by writer relating to capabilities. ‘Drive for results’ has been placed on a higher rank by European managers in comparison to either their Asia-Pacific or North American counterparts (Rowson, 1998). Work culture of India is characterized by low masculinity and low individualism, for an instance, good work is recognized and personalized relationship is prioritized more than the attainment of the job goals (Mendonca and Kanungo, 1996).
The suggestion that goal setting need to be a combined activity comprising the person and linked line managers is supported by underpinning theories and literature. Even though, it is a western concept to involve the employee in the process. This concept does not frequently transport among cultures, mainly the cultures having high power space (Fenwick, 2004), as well as a variation is also found in the multinational corporations (MNCs) regarding the practice used by them in diverse national circumstances. These variations similarly have been notices in China case, where Chinese cultural characteristics like admiration for hierarchy plus significance of ‘face’ led to the situation where along with the assigned goals MNCs also use determined goals. Also MNCs need to alter number and nature of goals to make sure that they could be easily achieved (Lindholmet al, 1999).
Development for the attainment of objectives
Another important thing to be considered is the capability level required for satisfactorily attaining the objectives and integrating the capability structure in a Performance Management System helps in the recognition of needed resources and development requirements. A key role is played by manager for not only coaching, motivating, organizing resources, enabling performance and making the development of any opportunity easily but also for observing and if required also modify the objectives and expectations of performance (Torrington & others, 2005).
In spite of the requirement for constant informal feedback, formal evaluation is the main part of any Performance Management System and performance can be reviewed against the objectives by using the performance appraisal system (Redman, 2001).
It is observed that performance appraisal serves many functions. Purpose of doing performance appraisal across 10 countries of Pacific Rim is studied by Millimanet al in 2002, focusing on main four aims that are development, subordinate expression, documentation and administrative purposes (promotion and reward). It is determined by them that propose of doing performance appraisal were not recognized as expected and dissimilarities among the countries were mentioned as cultural dissimilarities. For an example, subordinate expression has been rated high by four countries of American continent along with Australia comparison to moderate rating of other countries, and Asian country’s strong power space orientation rated subordinate input lower in the process of appraisal. Dissimilarities between the aims of doing performance assessment in Chinese and western MNCs is reported by Sheen (2004), recommending that main aim in the last part is give determination to a certain extent in comparison to the organizational and individual development, thus giving a reflection of current preoccupation of Chinese companies with business results of short term instead of the strategic goals of long-term. Undoubtedly, lots of difficulties are there for performance management and considering it as important element in the national culture. Now, another issue relating with the performance organization as well as rewards has been considered in detail.
Significance of the Process of Performance Management
Finger and Flanagan (1998:154) cited most of the process of performance management includes the agreement on the expectations and standards by staff and managers, observing progress, identifying accomplishment as well as analyzing the performance presented with review and recognition attribute in the plan of maintenance.
It is very important that employee and supervisor accept and understand the job expectations of every person. Whole process of performance management is based on this. Both employees and supervisor need to face the challenge of comprising negotiating abilities because they need to accept and get agreed on job expectations of every person. Main aim of this process is to enhance the performance and develop people by coaching regularly and clarifying goals (Cornell University, 2010). Another aim is to give accurate and honest formal assessment to pay reward for the practices of performance.
Process of performance management is significant as it involves the employee’s performance planning, reviewing performance and make easy the accomplishment of work relevant objectives as a motivating approach for employees to attain their full capability according to the objective of organization (Swanepoel et al, 1998 like stated by Maila, 2006:8). From the above given literature, it is assumed by the researcher that the process of performance management was significant because it involves accepting the standards, planning the performance of employees, evaluate and monitor the performance with an opinion to make it easy to attain the goals related with work. This process is further significant because it permits two way feedback which aims towards punishing and supporting the practices of performance. A framework of performance management model (Source: Cornell University, 2010) which is very useful has been provided by the literature and presented in figure 1.
Figure 1: Model of the Performance Management
(Source: Cornell University, 2010)
Performance Management Model is presented as a cycle consisting of four main parts that are planning, evaluating, identifying and career growth. According to an argument, this model identifies the significance of coaching because it links every stage of this model.
Finger and Flanagan (1998:153) cited that “to make an efficient team, coaching is a main step, but it could not be done messily”. Employee’s goal alignment at the time of planning stage is also a significant characteristic of this model. An important benefit is that understanding of researchers for the significance of the process of performance management contributing for the career growth of employees has been increased by this model. Another argument is given for this might be that this model has been prepared for the educational institute thus its application need to be increased specially exterior to the University range. Spangenberg’s Integrated Performance Model has also been reviewed by this study.