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Discuss the main components of performance management and indicate how they can

contribute to individual, team and organizational performance.

Performance management
Define:
Performance management is a process which contributes to the effective
management of individuals and teams in order to achieve high levels of
organizational performance (Armstrong and Baron- Performance Management-IPD1998). Assuming that strategy is expressible in terms of objectives, and goals and
performance can be measured by reliable parameters, Mabey, Salaman and Storey
say Performance management comprises a set of activities that aim at:
-

Assessing/estimating the contribution of human resources to the strategic


objectives of the organization
Building a framework of techniques to ensure objectives are achieved to the
best possible extent
Assessing the functioning of the processes by measuring performance
against goals
The principal component of the performance management system
(Marchington Wilkinson)
Counseling
&
Support

Induction
&
Socialization

Performance
Management
System

Reinforcing
Performance
Standards

Reviewing &
Appraising
Performance

The cycle is in conjunction with every step of the employee life cycle (R. Harrison).
Performance management should apply to all employees (managers, teams and
individuals) and its about interrelationships among these three. To ensure the
system functions efficiently, the process has to be assessed and practiced at all
stages (horizontal integration) across all levels of management (vertical
integration):

1). INDUCTION & SOCIALISATION:

MISSION STATEMENT
(ORGANISATIONAL GOALS)SET BY MANAGEMENT

DEPARTMENTAL/ DIVISIONAL
OBJECTIVES- COMMUNICATED
BY LINE MANAGERS

PERFORMANCE STANDARDS &


EXPECTATIONS :
- CORPORATE
COMMUNICATIONS
- JOB DESCRIPTIONS
- KEY ACCOUNTAIBILITTIES

New recruits are briefed through formal communications and socialization into the
organization. Line manager involvement is crucial to induction and socialization
process.
2). PERFORMANCE REVIEWING AND APPRAISAL
Once the performance dimensions have been chosen, they need to be assessed and
reviewed, quantitatively and qualitatively keeping in mind the reliability and validity
of the methods. It is done between employee and line manager on an annual or
more frequent basis.
Individual performance and how we measure it (according to CIPD)

Achievement of pre-set objectives(such as reducing wastage by a specified


percentage)
Achievement against agreed standards of performance, which might involve
descriptions or ranking such as excellent, good, satisfactory or poor
performance
Specific instances of performance, such as commendations received for
particular pieces of work.
Depending on organizational culture, structure and leadership style, appraisals of
the following type can be used:
- Self Assessment
- Peer assessment
- Team review
- Customer review
- 360 degree feedback
- Upward review
Team performance measurement includes: (as CIPD)
Individual contribution to the team through involvement in cross-team
projects
Support for other team members to achieve their objectives
Participation in cross-organization initiatives, for instance by providing timely
input
Understanding of team role
Engagement scores.
The performance review process in turn, should be linked to training & development
(TNA), career progression and rewards.

Organizational performance comprises the actual output or results of


an organization as measured against its intended outputs (goals or objectives).
According to Richard et al. (2009) organizational performance encompasses three
specific areas of firm outcomes:
Financial performance (profits, return on assets, return on investment, ...)
Product market performance (sales, market share, ...)
Shareholder return (total shareholder return, economic value added, ...)
Principles of performance management should be discussed daily between
managers and staff and also through formal review of the performance which
ensure vertical integration that penetrates through all levels of management.
3). REINFORCING PERFORMANCE STANDARDS
Sometimes even if great care has been taken with job analyses, recruitment,
selection and induction, they may also identify performance problems; this brings us
to the 3rd component of performance management system (reinforcing performance
standards). An overall review of the performance management process itself (by
using Balanced Scorecard, Gap Analysis, KPIs and CSFs) would provide an outlook of
the entire process and discrepancies identified can be resolved by:
-

Development and Talent Management


Management of poor performance (identifying weaknesses to help set
development targets)
Review of departmental and individual goals and objectives in line with
strategic goals and objectives
Managers can clarify what they expect individuals and teams to do, likewise
individuals and teams can communicate what they expect from their
managers.
Managers
Interrelationships

Teams
Individuals
This can be done on every level of management and annual meetings be held to
ensure communication of relevant information to check for any required
modification of existing processes (vertical integration).
4). COUNSELING AND SUPPORT
Even by implementing all the above stages in organization, employees might
underperform, which can be attributed to:
-

Lack of interest or psychological problem:


Solution: counseling and support to enable individuals to meet performance
requirement. In some cases informal support from the line manager may be
enough, in other cases professional help may be necessary using
occupational health or counseling services.

Lack of motivation:
Motivational techniques like Goal Setting Theory (Edwin Locke), Expectancy
Theory (Victor Vroom) and Maslows Hierarchy of Needs can help assessing
the existing motivational levels as well as developing higher levels of
motivation.

According to John Shields development, rewards and staffing is interrelated with


Performance results. It means development; rewards and staffing are based on the
outcome of and vice versa. These are the tools of horizontal integration.

Staffing

Job Design

Recruitment

Selection

Rewards

Intrinsic

Social

Developmental

Financial

Development

Knowledge and
technical skills

Attitudes and
abilities

Performance
Management

Standards

Evaluation

Feedback

Enhancement

When HR drives performance on 3 levels of individual, team and organization, it


adds value to the organization.

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