HRM544 PERFORMANCE MANAGEMENT CHAPTER ONE: PERFORMANCE MANAGEMENT AND REWARD SYSTEMS IN CONTEXT

ROOM: ACCTCY)

AC 347 (FACULTY

OFFICE NO.: 05-3742387 /019-4328546 E-mail: izmayani@perak.uitm.edu.my

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OBJECTIVES OF THE COURSE OBJECTIVES OF THE COURSE

After completing the course the students will be able to :
Explain the concept of PM Distinguish PM from PA Explain the many advantages and make a business case for implementing a welldesigned PMS Recognize the multiple negative consequences that can arise from the poor design and implementation of a PMS Understand the concept of a reward system and its relationship to a PMS Distinguish among the various types of employee rewards, including compensation, benefits, and relational returns Describe the multiple purposes of a PMS including strategic, administrative, informational, developmental, organizational maintenance and documentational purposes Describe and explain the key features of an ideal PMS Create a presentation providing persuasive arguments in support of the reasons that an organization should implement a PMS, including the purposes that PMS serve and the dangers of a poorly implemented system Note the relationship and links between a PMS and other HR functions, including recruitment and selection, training and development, workforce planning and compensation

WHAT IS PERFORMANCE ?

PERFORMANCE = BEHAVIORS + RESULTS

- Williams (2002)

DEFINITION: The process of identifying, evaluating and developing the work performance of employees in the organization, so that organizational goals and objectives are more effectively achieved, while at the same time benefiting employees in terms of recognition, receiving feedback, catering for work needs and offering career guidance. - Lansbury, R.D. (1988). (In Rajkumar, K. (2002). Performance management system for Malaysian organization.)

Oxford English Dictionary- the accomplishment, execution, carrying out, working out of anything ordered or undertaken -Refers to outputs/outcomes (accomplishment) but also states that performance is about doing the work as well as being about the results achieved -Also be regarded as behavior- the way in which organizations, teams and individuals get work done

PERFORMANCE MANAGEMENT AND REWARD SYSTEMS IN CONTEXT PM- continuous process of identifying, measuring &
developing the performance of individuals and teams and aligning performance with the strategic goals of the organization Two main components:
Continuous process Alignment with strategic goals THE DIFFERENCE BETWEEN PM AND PA
- PA- systematic description of an employees strengths and

weaknesses

BACAL, R (1999)
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THE PERFORMANCE MANAGEMENT CONTRIBUTION

Motivation

to perform is increased is increased

Self-esteem The

definitions of job and criteria are clarified and development are enhanced actions are more fair and appropriate goals are made clear

Self-insight

Administrative Organizational Employees There

become more competent

is better & more timely differentiation between good and poor performers

Supervisors views of performance are communicated more clearly change is facilitated

Organizational

BOX 1.1- WHAT CEOs SAY ABOUT THE CONTRIBUTION OF PMS

PM systems are a key tool that organizations use to translate business strategy into business results PMS influence financial performance, productivity, product/service quality, customer satisfaction, and employee satisfaction 79% of CEOs say that PMS implemented in their organizations drives the cultural strategies that maximize human assets

DISADVANTAGES/DANGERS OF POORLY IMPLEMENTED PMS

Increased turnover Use of misleading information Lowered self-esteem Wasted time and money Damaged relationships Decreased motivation to perform Employee burnout and job dissatisfaction Varying and unfair standards and ratings Emerging biases

BOX 1.2- WHAT HAPPENS WHEN PM IS IMPLEMENTED POORLY?

A female employee was promoted several times and succeeded in the construction industry until she started working under the supervision of a new manager She stated that once she was promoted and reported to the new manager, the boss ignored her and did not give her the same support or opportunity for training that her male colleagues received She won her sex-discrimination lawsuit, a jury awarded her $1.2 million in emotional distress and economic damages

Tangible returns-includes cash compensation (base pay, cola and merit pay, short-term incentives and long-term incentives) and benefits (income protection, work-life focus, allowances etc) Intangible returns (relational returns)-include recognition and status, employment security, challenging work, and learning opportunity

DEFINITION OF REWARD SYSTEMS

1.Base

pay 2.COLA adjustments and contingent pay 3.Short-term incentives 4.Long-term incentives 5.Income protection 6.Work/life focus 7.Allowances 8.Relational returns

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AIMS AND ROLE OF PMS

1.1 strategic purpose to help top management achieve strategic business objectives by linking individual goals with organizational goals serves as a way to communicate what are the most crucial business strategic initiatives 1.2 administrative purpose To furnish valid and useful information for making administrative decisions about employees 1.3 informational purpose Serve as a communication device (inform employees about how they are doing and provide information on specific areas that need improvement

AIMS AND ROLE OF PMS

1.4 developmental purpose Feedback is an important component of well-implemented PMS To coach employees and improve performance on an ongoing basis Employees receive information about themselves that can help them individualize their career paths 1.5 organizational maintenance purpose Provide information to be used in workforce planning (a set of systems that allows organization to anticipate and respond to needs within and outside organization, to determine priorities etc) Assess future training needs, evaluating performance achievements at organizational level 1.6 documentational purpose Allow organizations to collect useful information that can be used for several documentation purpose - Performance data can be used to validate newly proposed selection instruments - PMS allow for the documentation of important administrative decisions

CHARACTERISTICS OF AN IDEAL PM SYSTEM

Strategic congruence
Congruence with the unit and organizations strategy

Thoroughness
All employees should be evaluated All major job should be evaluated Evaluation should include performance across the entire review period

Practicality
Include good, easy-to-use systems Give benefits (improved performance and job satisfaction)

Meaningfulness
Standards and evaluation conducted for each job function considered important

CHARACTERISTICS OF AN IDEAL PM SYSTEM Specificity

Provide detailed and concrete guidance to employees about what is expected of them and how they can meet these expectations

Identification of effective and ineffective performance

Should provide information that allows for the identification of effective and ineffective performance

Reliability

Measuring performance that are consistent and free of error

Validity Acceptability and fairness Inclusiveness Openness

Box 1.5- GOOD PM IMPLEMENTATION PAYS OFF

Study

conducted revealed that the 1,200 workers stated that they could improve their productivity by an average of 26% if they were not held back by a lack of direction, support, training and equipment Successfully implementing a PMS can give workers the direction and support that they need to improve their productivity

INTEGRATION WITH OTHER HR AND DEVELOPMENT ACTIVITIES

PM is the key factor used in determining whether an organization can manage its human resources and talent effectively PM provide information on who should be trained and in what areas, which employees should be rewarded PM also provides information on the type of employees that should be hired