Performance Management System: A Powerful Tool to Achieve Organisational Goals

By Gunaratne, K. Asoka; Plessis, Andries J. du | Journal of Global Business and Technology, Spring 2007 | Go to article overview

Performance Management System: A Powerful Tool to Achieve Organisational Goals


Gunaratne, K. Asoka, Plessis, Andries J. du, Journal of Global Business and Technology


ABSTRACT

Performance management is a system and not simply a once a year meeting to review the past year's performance and set goals for the next year. Setting goals, preparing performance plans, conducting reviews, tracking behaviours, gathering data, and writing evaluations are all activities of a performance management system that requires time, commitment and skills. This article discusses a performance management system employed by a Fortune 500 company and how its employees rated the individual facets of the system, as well as their overall satisfaction with the total system on completion of the fifth year of implementation. It elucidates how the organisation aligned the performance management system with the organisational system and articulated the company business objectives to the individual goals. The results of the study show that implementing a performance management system that people understand and believe in will provide a powerful foundation for the employees to achieve their ambitions and organisations to achieve their key financial goals.

BACKGROUND

More than a decade ago performance management was defined as the cyclical, year-round process in which managers and employees work together on setting expectations, coaching and feedback, reviewing results and rewarding performance (Campbell & Garfinkel, 1996). This view is supported by Delahaye (2005), although he is also linking it with human resource development. During the implementation of performance management systems managers need to be open to employees' inputs, responsive to justifiable questions and concerns on performance standards and evaluations. In the long run managers benefit by honestly administering these systems. They help to prevent and quickly resolve work problems, interpersonal conflicts and have a significant impact on organisational success. A performance management system should not be used as a psychological counseling or a discipline process.

A more recent view of Härtel, Fujimoto, Strybosch and Fitzpatrick (2007) include the diversity of the workforce. They refer to performance evaluations as diversity-open performance evaluations and regard it as essential to the motivation, retention and promotion of diverse individuals. They are further of the opinion that diversity-open performance management is to evaluate performance based on-job-related characteristics rather than irrelevant characteristics of the individual. To ensure diversity-open performance management, organisations need to incorporate diversity into their objectives and include diversity criteria in the performance evaluations.

Härtel et al (2007) are referring to performance management in short as the management of organisational and employee performance or as an integration between the two. It can also be seen as a collective range of activities conducted by an organisation aimed at enhancing individual group performance with the overarching purpose of improving organisational performance in the long term. De Cierie, Kramar, Noe, Hollenbeck, Gerhart, Wright (2003) support this view but add that managers are to ensure those employees' activities and outputs are congruent with the organisation goals.

Managers under traditional systems use the decision latitude available to them to bias and distort employee evaluations (Longenecker, Gioia & Sims, 1987). They both inflate and deflate them to further their own interests. Problems involving favouritism, inconsistencies in pay, sexual harassment and race discrimination are among the most difficult to resolve according to Wiley (1993). More recent views are from Stone (2005) in referring to key elements such as the creation of shared vision and organisation's strategic objectives with performance objectives for each business unit or function. Distortions, as referred to above, due to such reasons become much more difficult with well-developed performance systems. They are more likely to produce high quality work than the poor systems (White, 1999). …

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