Advise on the Issues and Consideration of an Effective Performance Management System and on the Effective Management of Individual Performance in the Workplace

Performance Management: Chapter 11

Outcome:

Advise on the issues and consideration of an effective performance management system and on the effective management of individual performance in the workplace.

To define the basis or standard of performance in the contemporary corporate environment, in which we as people work today, is not easy and to measure it is even more difficult. There is no one-size-fits-all approach to performance management and therefore care needs to be taken to ensure that organizational context, strategic goals and culture are fully considered when developing a performance management system.

A more modern and holistic approach of performance management is objectives-setting approach called management by objectives (MBO), which involves taking the organization’s overall strategic objectives and translating them into clear personal objectives for each employee. The manager needs to understand the related business objectives relevant to different departments of the organization and then meet with the employee to collectively agree on personalized objectives, key performance indicators, as well as the criteria for assessing the accomplishments of these objectives. The outcome of the meeting is a signed performance agreement between the manager and the employee.

The performance of an employee equates to the ability of the person to perform his or her duties and responsibilities, as well as the willingness of that person to exert effort in doing these duties (motivation).

This process ensures that the performance requirements of each employee are in line with the strategic objectives of the organization, as well as allows the employee to be involved in, and to manage, his or her own performance. This places emphasis on the Goal-setting theory, which states that if the personal objectives are understood and accepted by the individual, the individual will be more motivated to perform better.

The Expectancy theory argues that the strength of an individual’s motivation to act and exert effort is dependent upon the person’s perceived probability that their behaviour will result in a desired outcome. Since the employee is directly involved in setting his or her personal objectives and thus deems them acceptable and achievable, the employee will behave in a favourable manner towards his performance requirements.

The alignment of the individual’s personal goals with organizational goals also has a positive influence on the employee’s behaviour and hence individual performance. This is because the individual can appreciate self-worth through realizing the significance of what he or she is doing. The social needs of the employee are met, since the employee feels as if he or she has more responsibility and autonomy towards the success of the organization. This relates to Maslow’s Hierarchy of Needs, where employees are motivated by intrinsic rewards. These include things such as personal achievement, professional growth, sense of pleasure and accomplishment.

Once the performance requirements have been established, managers will need to assess and review the performance of individuals. There is a lot of controversy in the way performance is assessed and then reviewed. In a case with Adobe Systems Inc., in 2012, the company abolished its traditional performance review system, where employees were ranked on a scale from 1 to 4 - because it was described as a “soul-crushing exercise”. When performance was reviewed at year-end, the HR team noticed involuntary turnover, where many good employees left the company.

MBO takes a different approach to the traditional appraisal systems, where managers are to have frequent one-to-one conversations with their employees as well as check-ins. These are more informal and enable employees to identify problems immediately and to take corrective action, such as training and development. In that way, employees have a better gauge as to where they stand in terms of meeting the performance requirements, and experience less pressure and anxiety for the formal assessment at year-end.

According to the Rademan and Vos, the traditional appraisal process has some implications. The appraisee’s are rated according to the singular perspective and judgment of one rater, where the relationship with the manager could have an effect on the rating. The attitudes towards appraisal will differ from the point of view of the appraiser and appraisee. Also, other important sources of information such as inputs from peers, other departments or customers are not taken into account. Therefore the reliability of the process may be questionable.