The Need for an Organisational Performance Management System - Example

A Report on the Need for an Organisational Performance Management System Executive summary The purpose of this report is twofold: to provide a rationale for an organisation to adopt a performance management system and to offer recommendations on how the specific system adopted can be used to enhance employee empowerment within the organisation. A performance management system is seen as an offshoot of the general concept of performance management, which is a critical part of the modern organisation. There are several types of performance management that an organisation can adopt and implement. In the first category are the traditional systems that are defined by the top-down approach that is used to set objectives and evaluate the work of employees. On the second category are the modern systems of performance management which are characterised by increased participation of employees and the need to empower them. With regard to what performance management system the organisation should adopt and the specific methods that should be used to empower the employees, it is recommended that the organisation adopts the 360 degrees feedback framework. This is so because the framework, being one of the modern ones, has gained popularity in terms of being used across organisations. Besides, the fact that the framework allows the input of employees throughout the process sits well the unique needs of the organisation, the most important of them being to empower the employees. Finally, it is recommended that in the process of implementing and using the performance management system, special care should be taken to ensure that the social, psychological and organisational aspects of employee empowerment are catered for. This should be done in the form of engagement, communication and use of an effective reward system as a means of providing motivation to the employees. Introduction This report is on the benefits that an organisation gets when it adopts and implements a performance management system for its employees. The report is divided into five different sections. In the first section, a brief description of performance management system is presented. The description covers the basic components of a sound performance management system. In the second section, the rationale for an organisation to design, develop and implement a performance management system for its employees is discussed. The specific needs for which such a system is required within an organisation are presented. It is such needs that justify the practice of organisations having in place one of the many different forms of performance management systems. The third section of the report contains information about different types of performance management systems. For every type discussed, its important characteristics, advantages and disadvantages are presented in brief. In the fourth section, the complex relationship between performance management in general and employee empowerment is presented. The point is to present different options of empowering employees that can be incorporated within the performance management system to be used by the organisation. Lastly, the report contains recommendations on a specific performance management system that should be adopted and how the system should be used to ensure that the employees within the organisation are fully empowered. A brief description of performance management system Performance management system arises from the concept of performance management which, according to Deb (2009, p. 35), has become a critical part of organisations in the current times because of the central role that it plays in the success of the organisation and individual employees. Therefore, performance management system, or performance appraisal as it is commonly called, is part of the concept of performance management within organisations. There are several definitions of performance management that have been developed. However, in simple terms, performance management can be described as a comprehensive strategic and integrated process that seeks to establish a culture of sustainable success within an organisation by continuously seeking to improve the performance of the employees and the contribution of teams (Deb 2009, p. 36). The process is essentially concerned with ensuring that an organisation succeeds over the long term by being concerned with three important things about the employees: what they do, their behaviour and what they achieve within the organisation. A performance management system can be defined as an organisational process that is used in setting goals with regard to the performance of employees, monitoring the progress, measuring the performance and rewarding the employees after the evaluation (Arthur 2009, p. 16). From this definition, it can be seen that a performance management system within an organisation is a process that is made up of several interrelated activities. First is the process of planning for the performance of the employees. This entails setting goals for the performance and behaviour of the employees that are mutually acceptable by all the stakeholders of the organisation. The second step in the process entails monitoring the performance of the employees and providing coaching services where required. It is through this process that the management of an organisation is able to carefully observe the conduct of individuals and the entire organisation as a system (Cardy & Leonard 2011, p. 5). Thirdly, the process entails measuring the performance of every individual employee within the organisation against set objectives and providing feedback to them with regard to their performance. It is basing on the results of the evaluation that employees are rewarded with respect to their performance and a new development plan is developed and implemented. Rationale for organisational performance management system The rationale for an organisation to adopt and implement a particular performance management system can be seen in the form of what the organisation can use the system for and what it stands to benefit in the short and long term. There are several reasons for this. First, a performance management system can be of use to an organisation in the form of aligning the functions of the management and the duties and responsibilities of individual employees (Arthur 2009, p. 17). This is beneficial to the entire organisation because the management is able to share the strategic vision of the organisation with all employees, guide the organisation to achieve its objectives and help the organisation gain a competitive advantage in the business environment (Clegg, Kornberger & Pitsis 2011, p. 202). The second rationale for an organisation to adopt and implement a specific performance management system arises from the need to improve the overall performance of the organisation. Essentially, performance management is meant to enable an organisation improve its overall performance by focusing on specific aspects of its process and measuring their performance against set objectives (Ana-Maria, Constantin & Catalina 2009, p. 277). What this means is that a performance management system is beneficial to an organisation because its use increases the chances of the organisation achieving its set goals and improving on them over the short and long term. Further, an organisation needs a performance management system in order to identify, evaluate and address diverse challenges of the workforce. Faseeh ullah khan (2013, p. 81) observes that this entails use of the system by organisations to do several things such as rewarding successful performance as a way of encouraging improvement and identifying and fixing an y issues that affect the performance of employees within the organisation. But of most importance with this regard is the use of the system by organisations to identify factors that may affect the retention of employees. This way, the system can be an effective means of helping organisations identify and deal with potential risk factors. Related to this is the issue of improving the performance of the employees. Since organisations share the common objective of improving their overall performance over time, the role of individual employees in this process is important. This is so because the overall improvement of an organisation rests on improvements in the performance of individual employees. To this end, a good performance management system can be used by an organisation to improve the overall level of commitment that employees have to the organisation as well build their specific skills and knowledge (Daoanis 2012, p. 58). This is beneficial to not only the employees but also the organisation in that there is an overall improvement in performance (Scullen 2011, p. 11). Types of performance management systems that can be adopted There are different types of performance management systems that an organisation can choose from. These range from traditional ones such as narratives and graphic rating scales to modern ones such as Management by Objectives (MBO) and 360 degrees feedback. The most important thing that an organisation should take into consideration when settling on a particular system is the extent to which the system meets its unique requirements. This is so since every organisation has its own unique requirements in the form of costs, human resources, management practice and overall organisational culture. The best system is one that fits into the culture that has already been established within the organisation. One common modern type of performance management system that is used in organisations is the 360 degrees feedback system. As the name suggests, this type of performance management system works by collecting feedback data about the performance of an individual employee from multiple stakeholders with whom the individual interacts with during the course of work (Meenakshi 2012, p. 92). The stakeholders in this case include peers, supervisors, senior managers and other employees within an organisation who are able to provide specific and accurate information about the way an employee interacts with them during the course of work. By doing this, the method is effective in evaluating not only managers but also other employees on their performance and general behaviour exhibited in the course of work (DeNisi & Kluger 2000, p. 133). There are several advantages that are associated with this method. One of them is that the system can be effectively used to identify areas in the behaviour of individual employees and groups that require general improvement (Pattanayak 2005, p. 129). Furthermore, the fact that the data which is used in the process is collected from a wide range of sources means that it is more accurate and can be useful for an organisation to base its strategic and general development goals on (Alexander 2006, p. 3). On the other hand, a common traditional form of performance management system that can be used within an organisation is the narrative method. In this method, evaluation of the performance of employees is done in the form of an essay that is written by the person doing the rating (Aggarwal & Thakur 2013, p. 617). Two different approaches are used in this method. In the first one, the critical incident approach, the supervisor records any significant event that is done by the employee during the evaluation period (Mathis, Jackson & Valentine 2013, p. 355). These events are used to validate the rating and scores given using the other methods of performance appraisal. In the second approach, essay method, a structured or free flowing essay on the performance of an employee is written by the supervisor (Caruth & Handlogten 2001, p. 214). The effectiveness of this approach depends on the observation and writing skills of the supervisor. The third type of performance management system used in organisations is Management By Objectives. Basically, this approach entails using goals and targets for individual employees which have been derived from the overall goals of the organisation (Sims 2002, p. 208). This process works in the form of four interrelated steps. In the first one, there is a detailed discussion with regard to the tasks that constitute the job of an employee. This is an important way of reaching an agreement on what exactly constitutes the job of an employee. In the second step, specific performance standards with regard to the job are developed. It is basing on these steps that a comprehensive evaluation of the work of the employee is done which is followed by a detailed appraisal of the work basing on the agreed objectives (Perry 2005, p. 173). Performance management and employee empowerment Empowering employees is an important objective that many organisations seek to achieve. Essentially, employee empowerment can be seen in terms of three key concepts: delegating the decision making process to employees, motivating the employees to pursue their objectives that are derived from those of the organisation and enhancing the degree of innovativeness among the employees (Doughty, n.d., p. 15). What this means is that employee empowerment seeks to recognise individual employees and enable them to attain skills that will help them gain satisfaction in the job and the society at large. According to Fracaro (2006, p. 6), employee empowerment means three things with regard to the style of work, skills acquired by the employees and the nature of the overall staff of an organisation. As much as empowered employees are able to take full responsibilities for the decision they make in the course of their work, they are able to challenge conventional wisdom of how things are done because of the level of training that they have undergone. It is these two characteristics that enable them to empower organisations and spearhead their growth. Ghosh (2013, p. 96) observes that employee empowerment is composed of several perspectives which are organisational, psychological, social and growth. All these perspective are important in that the success of an empowerment program that is used depends on how well every one of them is catered for. An organisation that empowers its employees stands to benefit in several ways. For instance, when empowered, employees develop a strong sense of responsibility and ownership for their work. This approach leads to increased productivity as they seek to achieve the set targets in their work (Murray & Jones 2006, p. 68; Stack 2013, p. 3). Increased productivity is beneficial to not only the individual employees but the entire organisation as well. Also, an organisation that seeks to empower its employees stands to benefit in the long run by developing a competitive advantage. By saving on time and improving the quality of its products and services, such an organisation is able to achieve efficiency which results into a competitive advantage in the form of innovation and responsiveness (Kahreh, Ahmadi & Hashemi 2011, p. 31). Further, by letting employees practice the power of decision making, an organisation gives them a chance to grow as individuals and develop a sense of collaboration with each other at the place of work (Singh & Dixit 2011, p. 589). This is an important attribute because increased collaboration at the place of work fosters teamwork which translates to growth for the organisation. Besides, since empowered employees are able to make decisions by themselves, this reduces the administrative costs within an organisation. There is a close link between employee motivation and employee performance management systems. According to Bacal (2014) this happens in two important ways: goal setting and accountability. With regard to goal setting, employees tend to feel completely empowered when they are working to achieve clearly defined goals. Furthermore, there is always the need to include their input in the goal setting process so that they take full responsibility of the process of working towards achieving them. Once employers are fully aware of how important their goals are to the entire organisation, they will tend to make the right kind of decisions on their own, thus demonstrating a strong sense of empowerment. With regard to accountability, when employees have a strong sense of freedom and responsibility as a result of the delegation process, they tend to be more accountable for their decisions (Griffin 2012, p. 307). This is a demonstration of being empowered to drive their own agenda in a way that benefits the entire organisation by achieving their set objectives. The process of performance management enhances this sense among employees since it seeks to include their input in setting the right kind of targets for their work and gives them leeway to see to it that the objectives are achieved. At the end of the process, the employees are evaluated in terms of how well they have achieved their set targets. Therefore, performance management systems enhance a sense of accountability among the employees which is an important element of their empowerment. Recommendations Regardless of the specific performance management system that the organisation adopts, what is important is that the system to enhance the degree of employee empowerment within the organisation. To this regard, we recommend specific steps that should be taken so as to ensure that the performance management system adopted by the organisation fosters employee empowerment in its operations. Our recommendations are based on the idea that the process of developing a performance management system within an organisation is undertaken in three key steps: design, implementation and ongoing use (Gillespie & Baird 2013, p. 3). Since each of these stages is characterised by specific needs that should be taken care of, we recommend that the organisation takes this into consideration and adopts the 360 degrees performance management system. Also, it should be noted that the process of empowering employees, which is a primary responsibility of management, entails increasing their level of authority and degree of accountability so that they able to make decision with regard to their work on their own (Griffin & Moorhead 2013, p. 125; Meyerson & Dewettinck 2012, p. 41).For organisations, the process or techniques of empowering employees entail a number of themes that are common for every one of them regardless of the size or industry in which they operate. Essentially, employees are empowered if they are given access to information. Employees are in constant for information about the current state of an organisation. Therefore, accurate and timely provision of such information that relates to the organisation is an effective way of empowering employees (Abadi & Chegini 2013, p. 79). Secondly, employee empowerment needs to take care of the needs of employees for recognition and reward. This calls for the establishment of an effective, fair and efficient reward system within an organisation. A reward system is important because it enables an organisation to achieve a number of important benefits. First, it strengthens positive behaviour among the employees. Second, such a system acts as a strong motivator to the employees. This is beneficial to the organisation as it is to the individual employees. Thirdly, we recommend that the performance management system adopted by the organisation entails a clear system of setting goals and objectives for the employees. The importance of goal setting in helping employees get motivated and empowered at the same time cannot be overemphasised. More importantly though, is the need for the process to be simple and clear so that all employees understand and can participate in it. We therefore recommend that when using the 360 degrees feedback system, the organisation develops a clear goal setting strategy that ties the objectives of the organisation to individual targets and extends from the senior management level to the lowest level within the organisation. Fourthly, as a way of empowering employees, we recommend that the organisation incorporates in its performance management system a mechanism for devolving responsibility and duty to employees. By doing this, the organisation will be nurturing a sense of duty among the individual employees. Although the managerial function within the organisation will not necessarily be diminished, this approach will foster a sense of ownership among eh employees thus encouraging them to perform at their optimum level. This, in essence, will be a means of psychologically empowering the employees in such a manner that trust, competence, choice and effectiveness are transformed into enhanced job performance (Taktaz, Shabaani, Kheyri & Rahemipoor 2012, p. 21). Conclusion In conclusion, it is recommended that the organisation adopts the 360 degrees feedback system of performance management. This is necessary not only as a way of enhancing the overall performance of the organisation but also being in line with modern advances in performance management. It is seen that although this model has been used for appraising the work of senior managers in organisation, current trends have seen is application being extended to all employees within organisation. Also, the need for employee empowerment has been identified as an important issue that needs to be addressed. Although there are different ways of empowering employees, several important methods, which can be easily incorporated in this performance management system, have been identified. The most important approach is to ensure that the social, psychological and organisational aspects of employee empowerment are taken into consideration. And since the 360 degrees system entails incorporation of employees in all the steps of the process of appraisal, it is the most suitable system to be adopted and implemented by the organisation. References Abadi, MVNA & Chegini, MG 2013, ‘Process of employee empowerment (concepts and dimensions),’ Kuwait Chapter of Arabian Journal of Business and Management Review, vol. 2, no. 11, pp. 76-83, viewed 25 September 2014 . Ana-Maria, G, Constantin, B & Catalina, R 2009, ‘The strategic performance management process,’ viewed 24 September 2014, . 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Taktaz, B, Shabaani, S, Kheyri, A & Rahemipoor, M 2012, ‘The relation between psychological empowerment and performance of employees,’ Singaporean Journal of Business Economics and Management Studies, vol. 1, no. 5, pp. 19 -26. Read More