Efficient and Effective Employee Performance - Essay Example

Strategic Value Of Performance Management Systems And Related Activities Name Class Professor Date Introduction Previous researches indicate that organisational performance often depends on wide criteria. The factors considered include productivity, customer satisfaction, profitability, marketing effectiveness and even employee morale. However, this paper revolves around employee performance, the activities involved in improving employee performance and systems used for the same. Efficient and effective employee performance influences organisational performance positively. In a research conducted by Millar (2007) a framework for talent management was built. The framework consists of planning, hiring, learning, performance, development of career, succession, measuring and reporting and compensation. Amongst many other resources, the employees constitute the most valuable resource. In many leading companies around the world, the main strategy for the management includes investing in their employees. Using a variety of applications and systems, organisations seek to develop, encourage and improve the performances of their employees. For this reason, this paper discusses why performance management needs to be considered as an important step in human resource management within an organisation (Kobbacy & Murthy 2008, pg. 9). Employee performance eventually impacts on the organisational performance. Nowadays, many organisations seem to be associating their competitiveness and success with employee performance. For this reason, the management needs to establish approaches for recognizing, motivating, increasing and rewarding employee performance and measuring and evaluating employee performance. Previous researches recommend that effective appraisal systems with good performance management could assist in achieving goals of productivity within an organisation. Additionally, human resources management exercises heavily influence the attitudes and behaviours of every employee (Michail 2011, pg.7). Definition Performance management involves a process of ensuring the focus of employees on their work positively contributes towards achieving the organisations’ mission. This process includes a system which constitutes a variety of activities. Performance management system helps the managers and supervisors in managing employee performance. In order for the performance management system to be effective, the appropriate strategy should be outlined in the organisation’s policy. Additionally, the policy requirements need to be consistent with the mission of the organisation (Bhattacharyya 2011, pg. 3). Ultimately, the employees need to comprehend that the sustainability of the organisation’s success depends on an effective performance management system. Furthermore, the management needs to understand that the perception of employees on the performance management system could result in resistance and lack of cooperation. Ultimately, the likely inefficiency in employee performance could lead to a decrease in the organisational productivity and performance (Bhattacharyya 2011, pg. 4). Challenges in Performance Management Businesses of today encounter challenges within three critical aspects of performance management. First, the processes of planning, forecasting and budgeting may not be strategically aligned with substantial resources. Second, reporting in performance processes tends to be inflexible and fragmented. This results in producing irrelevant performance management results frequently. Third, performance management fails to measure performance effectively or invent the most important metrics. Companies make huge investments in enterprise resource planning software and other software applications in an attempt to overcome these challenges. However, these organisations fail to make decisions depending on a fully integrated performance management. This integrated view includes the performance measurements, drivers and overall shareholder value created in that individual company. Companies such as Deloitte make use of an (IPM) integrated performance management approach. Whilst providing consultation and auditing services, Deloitte integrates the fundamental systems, processes and tools for planning, managing and measuring performance (Jones 2008, pg. 8). Benefits of clearly elaborated performance management Effective performance management helps an organisation in a myriad of ways. First, it helps in focusing on strategic execution. Second, it aids in developing strategically aligned and streamlined financial forecasts and budgets. Third, it allows for better decision making I capital allocation. Fourth, it provides a seamless alignment of performance measurement and plans with shareholder value. Fifth, it improves visibility of basic organisational drivers as well as restructuring management reports and creates an integrated view. Sixth, the effective performance management system helps to retain and motivate employees towards an organisation’s strategic goals and providing relevant rewards (Bhattacharyya 2011, pg. 22). Literature review Various literatures exist with information on the numerous models of performance management. The researches further elaborate on the benefits of every system used for managing employee and organisational performance as well as integrating the two. Performance management system includes in-depth levels of analysis linked to strategic human resource management and performance appraisal. Performance management could also be referred to as planning; performance based budgeting, programming and budgeting, pay-for-performance and management by objectives (Michail 2011, pg.12). According to Martinez (2012) performance management system refers to a means for integrating activities within human resources management with those of the organisational objectives. In this measure, human resources practices work together with management to support the business strategies of the organisation by influencing collective behaviour as well as individual behaviour of employees. Performance management system occurs as a congruent and completed cycle in performance management. This system focuses on continuously improving organisational performance through improving individual performance at work. The objectives of the system include motivating employees to develop their individual skills, motivation improved performance, hiring and firing accordingly, determining individuals worthy of a promotion and helping business strategy implementation (Martinez 2012, pg. 11). Every organisation needs to develop its own performance management system. According Dresner (2008), building a performance management system occurs in five phases. These phases include development, scheduling, managing, evaluating and rewarding. Other studies suggest that an effective consists of various essential aspects. First, it informs employees on the strategies and missions of the particular organisation. Secondly, it allows integration of an individual’s performance targets with individual, team and organisational strategies and missions. Thirdly, it allows or consistency in appraisal of employees against the acceptable targets. Fourthly, performance management system allows for application of appraisal results in administrative decisions regarding necessary developments. Finally, the system allows for continuous review in accordance with organisational performance. Ideally, this review could be effective with consultation of employees (Dresner 2008, pg.18). Guo (2007), noted that the structure of the performance management system involves developing the missions and objectives of an organisation; improving communication beyond the business objectives and plans; clarifying employee accountabilities and responsibilities; defining measures of individual performance; enforcing appropriate reward approaches as well as encouraging the staff to improve their performance which could result in career progression (Guo 2007, pg. 32). Stages of Performance management system The first stage, planning and developing performance includes setting objectives, defining development strategies and outlining commitment practises. The second phase involves managing performance and reviewing performance. The activities in this phase include obtaining feedback, assessing objectives, coaching as well as document reviews. The last phase involves rewarding performance. The activities involved include individual development, results of performance review and link to pay appropriately. The following section discusses in detail on the above mentioned phases of performance management system (Bhattacharyya 2011, pg. 22). Phase One: Developing and planning employee performance Planning occurs as one of the main roles of management. Planning, as understood globally occurs as a continuous process in performance management. It helps in enforcing commitment by attaching the organisational objectives, missions and goals to the performance of an employee. This aspect often includes recognizing important stakeholders such as the customers, employees and shareholders. Alternatively, goals define activities to be accomplished over a fixed period of time by organisations, departments and individuals. Goal setting occurs as the most basic aspect within an organisation. Research indicates that productivity values correlate with the amount of support from top management and active participation of employees in setting objectives. This activity of involving staff creates a sense of ownership among the employees (Kauffman & Tallon 2009, pg. 18). Another aspect of planning includes a formal development plan. The development plan needs to be founded on required knowledge and skills for achieving the identified targets and objectives. Additionally, a development plan could include long term initiates of development based on good performance. This phase basically allows the supervisors and their juniors to set specific goals for the organisation as well as individual goals for employees. On the other hand, objectives provide a platform for measuring and assessing individual performance against established metrics of evaluation (Kauffman & Tallon 2009, pg. 18). Phase Two: Managing and evaluating performance According to Dresner (2008), every employee holds a capacity to manage their individual performance. In managing, an employee needs to fulfil various responsibilities. These responsibilities include upholding a positive attitude towards work, updating initial objectives and job competency areas as the conditions change, seeking feedback and providing feedback. Additionally, the employee needs to work with the supervisors in managing the performance management system. Performance management could be used as a tool for effective management. Therefore, a performance management system helps in creating awareness on expectations of employees and the capacity to deliver on the same (Dresner 2008, pg.34). According to Bhattacharyya (2011) a performance management system helps in informing the managers on the impact of their attitude on their subjects. In this phase, the actual performance and the desired performance of an organisation could be compared to give an outcome. Here, the managers evaluate the outcome in order to build a development plan based on the inherent weakness and with reference to strategy. The outcome also acts a form of feedback to the employees. For this reason, communication needs to be concrete between employees and between managers and employees. Additionally, an effective performance management system requires managers to identify many forms of communication which could lead to the success of the firm. Moreover, continuous communication between internal stakeholders and the organisation’s strategic managers improves commitment to the organisation. In this phase, coaching and learning also occur similarly to the previous phase (Upayokin 2008, pg. 14). Phase Three: Rewarding Performance This phase involves three major activities which include employee development, link to pay and identifying performance. Research suggests that personnel development could be accelerated over and above the natural growth result in in better contribution towards individual and group goals. Personnel development takes place through principles of personal involvement which forms the basis of self-development. The second principle of mutual goal allows for a collective clear understanding on the set objectives. The third principle requires that organisations should offer universal opportunities to every employee rather than singling out a few. Fourthly, personnel development requires individual planning. For effective individual planning, one needs to understand that development aims at improving the current performance. Therefore, development should be compatible with the individual as well as the situation. The fifth principle includes continuity which states that individuals need to continuously improve and update their skills. In this aspect, managers need to identify performance gaps and consequently provide training (Martinez 2012, pg. 21). In this phase, managers focus on evaluation and availability of feedback. Often, scorecards could be used in order to build a consensus on the organisation’s strategy and vision. In this stage, the key performance indicators (KPI) come into play. The KPI can be defined as a metric used for reflecting how well a company could achieve its set objectives and goals. Among many measures possible, the financial performance measure includes shareholder value. This shareholder value could be determined using growth and profitability observed through cost reduction and sales volume growth, economic value added, liquidity and solvency for instance ratio of debt to organisational assets. Another measure on client profitability and client satisfaction universally referred to as customer perspective measures need to be assessed by the organisation. Finally, performance measures could be determined using workforce productivity, employee retention and the number of implemented suggestions out of the total suggestions made by employees (Guo 2007, pg. 32). This literature review brings out a difference of definition between Bhattacharyya (2011) and Englin (2001).The difference lies in communication. Bhattacharyya (2011) points out that improved communication within an organisation helps to create awareness of the business plans and objectives among the employees. Furthermore, employees could maintain communication in the production process, discuss setbacks and seek feedback. On the other hand, both literatures include coaching, seeking feedback, assessing individual performance and rewarding performance appropriately (Bhattacharyya 2011 pg. 5). In conclusion, performance management systems create an understanding that employees form the basis of competitive advantage for service providing businesses. Employee performance greatly influences the general organisational outcome. As discussed above, employee performance includes quantity of output, timeliness of output, quality of output cooperativeness and presence at work. Employee appraisal for positive performance helps to boost competitiveness. Appraisal could be monetary rewards or other forms of compensation. Sometimes, appraisals could be based on individual behaviour or work performance. Often consistency could result in higher scorecards for an individual employee (Zhan, 2008 pg. 12). 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An investigation of the relationship between value chain activities and generic strategies in small and medium-sized enterprises in UK Manufacturing. München, GRIN Verlag GmbH. http://nbn-resolving.de/urn:nbn:de:101:1-2012010918912. UPAYOKIN, A. (2008). Multi-criteria assessment for supporting freeway operations and management systems. Thesis (Ph.D.)--University of Texas at Arlington, 2008. http://hdl.handle.net/10106/1887. ZHAN, B. (2008). An integrated quality assurance framework for enterprise performance management systems. Ottawa, Library and Archives Canada = Bibliothèque et Archives Canada. Read More