Analysis of the Strategic and Transactional Aspects of Performance Management - Assignment Example

A CRITICAL REPORT EVALUATING THE STATEMENT BY JESUTHASAN (2013) A critical report evaluating the statement by Jesuthasan (2013) Customer Inserts His/her Name Customer Inserts Grade /Course Customer Inserts Tutor’s Name 11, 11, 2013 Table of Content Introduction 1 An Analysis of the Strategic and Transactional/ Tactical Aspects of Performance Management 1 The Role of Human Resource Management in Building Performance Culture 3 Challenges Human Resource Managers Face in Supporting Strategic Role of Performance Management 7 Recommendations on How Strategic Role of Performance Management Can Be Promoted 9 References List 14 Introduction Performance management has been proven to be quite important and pivotal in an organization’s operations and decision making processes. It is practiced through putting measures into place with the main objective of achieving both long term and short term goals. A tactical approach to performance management confines it to a particular time frame and assists in achieving short term goals. The strategic aspect is more interactive and it used to forecast achievement of objectives on a longer term basis (Budworth and Mann 2011). An Analysis of the Strategic and Transactional/ Tactical Aspects of Performance Management A strategic approach to performance management places its focus to the broader issues affecting the company in order for it to operate effectively in its current environment. Various factors are considered and the general direction the company will take in order to achieve its long-term objectives is determined. A tactical approach to performance management on the other hand concentrates on the various activities that are conducted in the company in order to achieve its short-term goals. Companies usually use either one or a mix of the two aspects in its performance management. This section of the report explores the differences and similarities between the two (Cowan 2008). A manager who is tactical in managing individual or team performance uses a command structure. He or she ensures that the company’s day to day operations are conducted as required regardless of contingencies. Short term objectives such as monthly or quarterly targets are monitored and measures are put into place to deliberate how they can optimally be met. The manager ensures the organization’s short term transactional obligations are met, such as paying employee’s salaries. This approach to performance management does not cater for improvement and future performance planning. As explained above, a strategic approach to performance management concentrates on issues that influence the achievement of long-term objectives of an organization. Rapid changes are taking place in the business world and companies are finding it really difficult to keep up and sustain a desired level of performance. Increased use of the internet and management information system, technological developments, changing demographic and developments in management thinking and planning and control are some of the issues that are mounting pressure in both profit and nonprofit organizations. Therefore, methods and processes have been developed in order to ultimately achieve a desired level of performance in an organization. A strategic performance management process incorporates both managers and the individuals or teams that they manage as acting partners. This process is aimed at being flexible and continuous over a long period of time. The various sub-processes that make up the entire strategic management process include target setting, strategic development of objectives, performance measurement, forecasting, performance compensation and performance review. At the first stage, objectives are developed strategically and this provides the company with clear goals that they target to achieve. It also creates a platform for action plans that will assist in the achieving of these objectives and how performance can be measured. Key value factors are thoroughly considered and the managers analyze how they can best incorporate them in order to gain a competitive edge. However, this stage focuses on calculating future financial results that may be unrealistic because it does not put into consideration environmental changes that might take place in the future. The key value factors or drivers identified at the first stage are then aligned with operational action plans. Resources are committed and financial targets are set for the next financial year. At the forecasting stage, the activities that are meant to attain the desired results are executed by the organization members. Regular forecasting is made after this to ensure that the organization is still on the right track towards achieving its objectives. Performance is then measured using key performance indicators (KPI) and is denoted through critical success factors (CSF). The last two processes include performance review and incentive pay. Forecasts, targets and actual performance are periodically reviewed to ensure that the organization’s objectives are in line with what was initially planned and are within the time frame that they are supposed to be met. Benefits policies and compensation are linked in a balanced way with operational actions. Unlike tactical performance management, strategic performance management is not mainly focused on creating a top-down process of appraising people. Though this process may be time consuming, it caters for improvement in performance over time, which is not evident with a tactical performance management process. A manager who is strategic while managing performance will tend to incorporate individual ability of his employees in the organization’s operations than create a blanket assumption on an entire team’s ability (Budworth and Mann 2011). The Role of Human Resource Management in Building Performance Culture A human resource manager is quite important to any organization. This department has the obligation of finding and keeping the right talent and this is vital in achieving an organization’s long term objectives. However, this domain has been primarily viewed as an administrative function that can detach itself from the organization’s priorities. If not kept in check, it might end up focusing on people issues and neglect its role as a leadership team. A human resource manager should be strategic rather than tactical and create a culture that focuses on high performance. He or she should be a change agent that advocates for high performance culture (Cowan 2008). The following are the various ways in which a human resource manager adds value to an organization in building its performance culture. a.) Develops a business case for cultural change The human resource manager is a change agent and should be in a position to explain why this change in culture is needed. He creates the culture conversation at all levels and aligns the desired results with the business strategy and how they will support the organization achieve its objectives. b.) Works with the senior leadership team to determine the desired culture The human resource management department should not work in isolation in its quest to change and improve the performance culture. He or she should incorporate other leaders in the organization. Each and every department should share the same visions and objectives in order for them to work in sync. All the leaders should embrace the same performance culture and lead by example in order for their subordinates to follow suit. c.) Develops an action plan for enhancing the culture The way the organization conducts its day to day activities is based on its core values. The human resource manager considers these values while creating plans that will execute the culture. In this way, the culture becomes self-replicating and ends up being part and parcel of the organization’s operations. d.) Creates an understanding why the culture change is needed and what needs to be changed A strategic human resource manager does not advocate for a high performing culture and yet he is oblivious of whether people understand it or not. He incorporates everyone and solicits for input in terms of ideas. He explains to them what needs to be changed and how it will be changed. All employees in the organization are provided with a detailed understanding of what is expected of them. At the end, they should have full knowledge of the compensation for the culture change that is being advocated for and the effects that it will have on the organization’s objectives. e.) Incorporates the organizational structure to enable change In order for a performance culture to grow over time, the organizational structure should be incorporated in the process and the required changes that need to be done on the structure are considered. The human resource manager finds new ways of accomplishing work tasks and the responsibilities and roles of each employee is broadened. This is done to ensure that the employees are not working in contrary with the organization’s objectives and strategy. f.) Acquires talent based on cultural fit This is one of the basic roles of the human resource department. A human resource manager finds employees whose characteristics best fit the culture that is being build. Such employees should depict a high performance culture in everything that they do. Some employees might have knowledge and are highly skilled for the job but they do not seem to be able to adapt to the culture. Other employees might be less skilled but fit into the culture perfectly. In such a situation, the human resource manager will employ the less skilled employee and provide on-the-job-training and get rid of those who cannot adapt to the culture change. g.) Re-designs the on-boarding process All the new employees are given detailed explanations of what is required of them and the level of performance that the organization is advocating for. They are advised on what it takes to fit into the organizations culture and how they should conduct themselves in order for them to be successful. h.) Creates cultural messages The human resource manager ensures that the organization’s values, traditions, missions and practices are reinforced through cultural messages. This is usually done during meetings and training programs. This ensures that the employees are keeping in mind the organization’s objectives and what is required to be done to achieve them. However, the human resource manager is usually careful not to become monotonous and irritating to the employees. i.) Builds an internal brand that supports the external brand The human resource manager ensures that there is consistency in the employee experience. The employees are made aware of the differentiating elements in their experience in the organization that will enhance their work lives and careers. This reputation is depicted both internally and externally j.) Recognizes and rewards results The process through which a human resource manager recognizes and rewards outstanding performance should be in line with the culture that he or she is advocating for. The rewards should be an exact reflection of the amount of input that was involved in the accomplishment of the task. k.) Cultivates leaders who promote a performance culture The human resource manager identifies individuals who can be able to pass the culture on and propel it down the ranks. Leadership development programs are used to identify such high potential leaders. They are promoted and are made leaders who will help in the further building of a good performance culture. l.) Uses Human resource tools in order to enhance the culture Annual benefits enrollment, performance review forms and training classes are some of the human resource tools that can be used to enhance a high performance culture. Performance review forms measure job performance and cultural fit. Training classes reinforces values and behaviors that will reinforce the culture (Cowan 2008). Challenges Human Resource Managers Face in Supporting Strategic Role of Performance Management The following are some of the challenges that human resource managers face in supporting strategic role of performance management. a.) Organizational fears The leaders in an organization may fear embracing and implementing a performance management process because of the uncertainties involved in the interpretation of its results. There is also the fear of what the results might indicate about departments’ performance. These fears are further enhanced by the lack of clarity of how it will affect the department and its employees. b.) Existing financial system limitation The financial system used by many organizations does not support or reflect operational analysis. The data that is incorporated does not have the capacity to draft a performance report. There is usually no linkage between operational and financial data that will determine various efficiency metrics such as cost per service unit. c.) Looking to software as the solution Creating or finding software that effectively serves and meets the organization’s needs has proven to be an uphill task. The software is usually not holistic and at times fails to meet the organization’s and government needs, such as in the case of the public sector. Depending fully on software to implement performance management process is also not very wise because software does not change behavior. d.) Strategic planning process overload A strategic planning process might focus too much on the planning and fail to capture the aspect of results and performance, which is the most vital. This might create the notion that the process is not important because it does not help in the attainment of the organization’s goals. The planning process might take unnecessarily long and consume the time that was supposed to be allocated for implementation (Okeudo 2012). e.) Difficult process The performance management process is quite a difficult and overwhelming procedure and it is considered to be time-consuming, complex and given the constraints in terms of resources, it requires great effort. This creates a negative attitude towards the process and a culture might develop within the organization that works against supporting the implementation of the process (Mucha 2011). Recommendations on How Strategic Role of Performance Management Can Be Promoted The following are some of the recommendations on how strategic role of performance management can be promoted in an organization. a.) Integration A good performance management must have an integrated approach. The key value drivers should be identified and placed to work in sync with the organization structure, and culture. It should also be harmonized with the human resource management processes, the strategic plan and the various organizational processes and systems. b.) Design The performance management process should be designed to address the challenges that affect the organization both directly and indirectly. When designing such a system, it is important that the human resource manager consults thoroughly with the major stakeholders in the organization. This is important in order to build a relationship of trust between the stakeholders and employees. Before being applied to the organization, the measures formulated to meet the organization’s needs must be tested meticulously. Failure to test it first and then later proving to be incompetent leads to a loss in finance, human resources, time and credibility. This will eventually cause a low acceptance of the new performance management system and increase resistance to change. Therefore it is imperative to ensure that the people who are assigned to develop the system have the required level of expertise (Rich 2013). c.) Leadership support The leaders in the organization must come into play and support in the implementation of the performance management system. They should depict a very high level of commitment and inspire their employees by driving the aspects of the performance management system towards achieving the organization’s goals. They should continuously communicate to their employees about the organization’s visions and provide the required rewards and support. d.) Implementation The leaders and managers should be careful as they engage to implement a performance management system. A strategic approach should be given to the aspect of change management. The top leaders should be at the forefront in driving the process of change. If there is resistance to change from the employees, the issue should be addressed proactively. There should be a well-designed communication process that clearly explains the effects of the performance management in terms of benefits and the progress so far made in its implementation. This will eliminate uncertainties, anxieties and fear within the organization. The managers should strictly adhere to the time frame schedules that were formulated to guide the implementation process. While measuring performance, the documentation must be done professionally and desist from bias and favoritism. The performance management feedback should be timely and continuous. If all this is put into consideration, the chances of a performance management process and system failing can be minimized. e.) Competence The people from the human resource department who are involved in the process of performance management should be highly qualified and competent. They should possess appropriate skills, knowledge and attitudes in order to fully utilize the system. They should be able to develop performance agreements, core management competencies, key results areas and performance indicators. They should also be able to measure these performance indicators and communicate the relevant feedback. The users of the performance management system should be continuously developed with focus being placed on behavioral aspects of performance and soft skills. f.) Rewards The performance of the employees should be a direct reflection of the reward system. High performing employees should be rewarded appropriately and measures should be put into place to deal with the low performing employees. The reward system should be holistic and comprehensive and should include learning and study opportunities, greater work responsibilities, promotions, merit awards, public acknowledgement and financial rewards. The non-monetary rewards should be given a greater emphasis than the monetary rewards. g.) Communication A performance management system has various phases and during which a good and strategic communication framework should be used. During the design and planning phases, communication will enable buy-in from the major stakeholders. Resistance to change can easily be managed during the implementation phase and reinforcing and learning achievements will be gained in the evaluation and monitoring phase. Without proper communication, the impact of other success factors in the performance management system will reduce greatly. h.) Inspiration The managers should be able to inspire their employees in order to achieve and sustain the desired level of performance in an organization. This should not only be done using incentives but also creating a sense of worth in the employees and the drive to deal with the various challenges that might face the organization. It is a basic role of a leader to inspire those who he or she leads. Having a highly skilled staff that is not inspired to perform can drag the achievement of the organization’s objectives. A review should be done on the organization’s structure in order to analyze the issues of bureaucracy, power, accountabilities and communication channels. The organization’s structure should not be a hindrance to staff motivation. i.) Monitoring and evaluation The performance management system should have a periodical monitoring framework that assists in its implementation. Constant monitoring and evaluation will detect problems at an early stage and give the managers enough time to solve them. It is advisable for an independent party to conduct the organization’s evaluation process in order to ensure its integrity (Rich 2013). References List Budworth, M & Mann, S 2011, “Introduction: Performance management: where do we go from here?”, Human resource management review, vol. 21, no. 2, pp. 81 – 84. Cowan, J 2008, “The strategic management of e‐learning support – By Moser, Franziska Zellweger”, British Journal of Educational Technology, vol. 39, no. 4, pp. 757 – 758. Mucha, M 2011, “Overcoming Challenges to Implementing Performance Management”, Government Finance Review, vol.27, no. 2, p. 65. Okeudo, GN 2012, “The Role of Strategic Human Resources Management in the Performance of Logistic Service Provider Firms: A Case Study of Owerri”, International Journal of Asian Social Science, vol. 2, no. 6, pp. 858-868 Rich, A 2013, “Performance management”, The Queensland Nurse, vol. 32, no. 3, p. 34. Read More