Employee Performance Management - Annotated Bibliography Example

Employee Performance Management Section One: Introduction Performance management is a relatively old construct that has existed for nearly two millennia in a wide range of forms. As early as the third century AD, the Chinese were already using performance appraisal systems. This concept emanated as a result of the need to improve worker’s performance or output (Evans 2004; Murphy & Cleveland 1995). In the course of the industrial Revolution on the 18th century, the use of performance gained significant momentum as many factory managers gradually became aware of the significance of employee performance in the production of outputs (Grote & Grote 1996; Murphy & Cleveland 1995). Consequently, many factory managers began to employ different strategies in form of performance appraisal and rewards so as to enhance the performance of their employees. Huprich (2008) observes that by 1960, atleast 60% of American organisations had some form of performance appraisal system. Moreover, many researchers and scholars such as Drucker, Fredrick Taylor, W.D Scott and Douglas McGregor among others began to develop models and theories on employee performance management (Huprich 2008). In this regard, Armstrong (2009) observes that one of the earliest references in literature to the concept of performance management was made by Warren (1972) in a study that focused on performance management in manufacturing companies (Armstrong 2009; Warren 1972). Nonetheless, Gillespie & Parry (2009) observe that although early literature explored the issues pertaining to performance management, a majority of these literatures significantly focused on appraisal or measurement issues while overlooking theory and practice issues pertaining to strategic planning, employee development and coaching. With time, as more research studies are being conducted on performance management, the concept is evolving from being an appraisal or measurement oriented process to a more holistic process that touches on different aspects of employee performance such as employee development and strategic alignment of organisational goals to employee performance (Gillespie & Parry 2009; Armstrong 2009). A critical look at various literature sources, it is evident that employee performance management is a broad and multi-dimensional concept that does not have a clear-cut definition (Aguinis 2007; Halachmi 2005; Varma, Budhwar & DeNisi 2008). Throughout history, this concept has been perceived and defined differently. According to Halachmi (2005) performance management is a process of enhancing organisational performance by defining organisational goals and making decision about the effective and efficient use of resources. Similarly, Aguinis (2007) argues that performance management is a continuous process that involves identifying, assessing, developing employee performance within the organisational context by linking employee’s performance with the overall mission and goals of the organisation (Aguinis 2007). Conversely, Varma et al (2008) define performance management as a system through which an organisation defines its goals, identifies the performance standards, assigns and assess work, provide feedback, determines development and training needs and allocate rewards in order to enhance employee performance (Varma et al 2008, p. 15). Ferreira & Otley (2009) further observe that performance management encompasses are a set of continuously changing formal and informal processes, mechanisms, networks or systems employed by organisations in conveying objectives and goals, assisting in management and strategic processes through planning, analysis, measurement, control, managing and rewarding performance. As earlier observed, performance management is a multi-dimensional concept that encompass different dimensions and variables (Demartini 2013; Ferreira & Otley 2009; Sahoo & Mishra 2012). Over the years, a number of studies have examined different dimensions of performance management. Studies by Ferreira & Otley (2009), Sahoo & Mishra (2012) and Demartini (2013) have found that some of the key dimensions of performance management include; planning, monitoring and assessing performance, rating, coaching and developing employees, providing feedback and rewarding employee performance. Each of these dimensions has been examined in different studies and have been found to play a critical role in the process of employee performance management (Armstrong 2009; Bryson 2011; Murphy & DeNisi 2008; Noe 2010). Many studies have particularly looked into issues revolving employee appraisal and rating, employee development and reward in the process of performance management. However, few studies have examined issues pertaining to feedback in the course of the performance management (London 2014). There is compelling evidence in literature that suggests that effective performance management can play an invaluable role in improving employee performance and the overall organisational outcomes (Armstrong 2009; Becker, Antuar & Everett 2011; Claus & Briscoe 2009). For instance a study by Sumlin (2010) found that, performance management directly impacts on five key organisational outcomes namely; productivity, financial performance, employee job satisfaction, product or service quality and customer satisfaction. Similarly, a study by Lawler (2008) established a positive correlation between performance management and organisational effectiveness. Although many studies have depicted that performance management can contribute to positive employee and organisational outcomes (Lawler 2008; Claus & Briscoe 2009), there are a wide range of variables that come into play as far as the success or effectiveness of performance management is concerned. Managers and policy makers therefore need to take into account these variables when designing and implementing performance management systems. Some of these variables include; organisational structure, organisational culture, leadership, management's decision-making style, technology and the context or industry that an organisation operates in (Ahmad 2012; Bann 2009; Bento & Bento 2006; Nzuve & Njeru 2013). Besides this, there are also a wide range of challenges that can contribute to the failure of performance management. Key among these challenges include; poor design, lack of suitable measurement lack of proper alignment between processes and organisational objectives, lack of leadership support and commitment, availability of resources, poor change management, poor communication and poor monitoring and evaluation among many other factors (Armstrong 2009;Kandula 2006; Rooyen 2014). Poor performance management be detrimental to employees as well as the organisation. Armstrong (2009) suggests that poor performance management can result to stress, burnout, demotivation and high turnover amongst employees. It can also diminish the efficiency and effectiveness of organisational process and cause the organisation to incur unnecessary costs. Despite of the many challenges associated with performance management, there have been a growing recognition and application of performance management processes in organisations worldwide. A survey conducted by the CIPD (Chartered Institute of Personnel and Development) found that out of 507 employees in different organisations in the UK, 80% indicated that performance appraisals are regularly carried out in their organisation regularly, 55% indicated that they are provided with career development opportunities while 60% of the employees involved in the survey indicated that they regularly attend meetings where their work progress is assessed. The findings of this survey are a clear indication that there have been a growing recognition and application of performance management processes in organisations today (CIPD 2009). This momentum has also been witnessed within the academic sphere where numerous research studies have been conducted over the years on a wide range of issues revolving around performance management. These studies have been grounded on different theoretical models of performance management. Some of the common PM models that have used in many research studies include; Murphy & DeNisi (2008) model, the expectancy theory and the goals setting theory among others (Dubrin 2008; Locke & Latham 2013). Over time, research studies within the realm of performance management have provided invaluable insight pertaining to employee performance. Research studies in the realm of performance management have noteworthy implications not only to managers and practitioners within the organisational context but also to policy makers. For practitioners or managers within the organisational context, research studies on performance management shed light on how an interplay of a wide range of variables influence the effectiveness of performance management systems and processes. Therefore, so as to ensure the effectiveness of PM processes and systems managers and practitioners must take into account how certain factors interact and the outcomes that they produce in the course of the performance management cycle (Armstrong 2009;Murphy & DeNisi 2008). On the other hand, based on the compelling evidence provided in several studies regarding the efficacy of performance management and the various factors that can hinder the success of the process, there is need for policy makers to develop clear guidelines and procedures that will ensure that suitable designed and practices are implemented in order to ensure the effectiveness of performance management systems (Armstrong 2009; Kandula 2006; Lawler 2008; Claus & Briscoe 2009). However, as the world is increasingly becoming globalised, business environments are becoming even more dynamic and competitive (Cullen & Parboteeah 2009). Changes experienced in today’s business environment expose some interesting research gaps that need to be filled by future research studies. Some of the evident research gaps prompted by changes in the business environment today and that future studies should examine include; Performance management in a multi-cultural or multinational organisations with a diverse workforce. Role of technology in performance management Impact on organisational structure on performance management practices Impact of Culture on Performance Management Practices Section Two: Empirical Review Upadhyay, D. & Gupta, A. (2012). “Efficacy of Performance Management System: An Empirical Study at ICICI Bank”. International Journal of Advanced Research in Management and Social Sciences 1(3), 216-225 This empirical study sought to examine the efficacy of performance management system in a commercial bank. It was carried out in ICICI Bank Ahmedabad, India. The study also sought to establish the various factors that contribute to the efficacy of performance management. Using a mixed method research design involving the use of questionnaires and content analysis, the researchers established the efficacy of the PMS used at the ICICI bank. In essence the PMS used at the bank was effective and efficient and helped the bank to realise the desired results. Some of the major factors that were found to contribute to the efficacy of the PMS used at the bank include; clarity of goals, broader mapping of performance rather than just the job, flexible goals and clear job descriptions. The findings of this study emphasises on the need for planning and setting clear performance goals as envisioned by Aguinis (2007) and Ferreira & Otley (2009). Although this study provided invaluable insight on the factors that contribute to the efficacy of PMS, one of its key limitation is that it incorporated a small sample of participants. In addition to this, it only focuses on one service organisation. Therefore, future studies should conduct a comparative analysis across different service organisations in order to provide a more comprehensive outlook on the factors that contribute to the efficacy of PMS. Bianchi, C. & RivenBark, W.C. (2012). “A Comparative Analysis of Performance Management Systems: The Cases of Sicily and North Carolina”. Public Performance & Management Review 35(3), pp. 509-526. In this study, Bianchi & RivenBark (2012) conducted a comparative case study analysis on the underlying conditions that produce strengths and limitations of performance management systems. The study was based in the regional governments of Sicily and North Carolina. Using a comparative case study analysis, this study sought to establish the strengths and weaknesses of PMS in these two public organisations and thereafter identify best practices that can be used to improve performance and efficiency in public organisations. This study is underpinned within the public administration theory. Following a comparative case study analysis, this study established that factors such as; organisational structure, leadership, management practices, performance management legislation, organisational culture and informational infrastructure mediate the strengths and limitations of performance management systems. Based on these findings, the Bianchi & RivenBark (2012) recommend the need for organisations to find suitable strategies for addressing the complexities associated with organisational structure, performance management legislation and the leadership of directors in developing sustainable performance management systems. One of the main limitation of this study is that its scope is limited in these sense that it solely focuses on issues pertaining to public administration in two regional governments. The findings of this studies are also generalised. Therefore, future research studies need to carryout additional comparative analysis in order to provide more details on the specific elements that enhance performance management within other broader areas of administration. Nzuve, S.N & Njeru, L.K .(2013). “Perceived Factors Affecting Performance Management among Local Authorities in Kenya: A Case Study of City Council of Nairobi”. DBA Africa Management Review 3(2), 59-69. The main objective of this study was to examine the perceived factors that impact on employee performance management. The study was based in the City Council of Nairobi, Kenya. A descriptive research design was employed. Questionnaire were administered to a total of 10, 600 respondents. The study established that the key perceived factors that impact on performance management include employee understanding on; leadership commitment performance management practices, organisational culture, stakeholder monitoring, continuous monitoring, learning from results and feedback dissemination. The implications of these findings accentuate on the need for organisation management to involve employee and other stakeholders in the implementation and making policy decisions pertaining to performance management. In addition, this study emphasises on the need for adequate resource allocation for staff training and development in order to ensure effective performance management. One of the main limitation of this study is that it is confined within the City County of Nairobi. Therefore, future research studies should extend their research on other organisational settings or cultural context in order to establish whether there is consistency in the perceived factors that impact on performance management. Moynihan, D.P. & Pandey, S.K. (2010). “The Big Question for Performance Management: Why Do Managers Use Performance Information”. Journal of Public Administration Research and Theory 20 (4), 849-866. In this study, Moynihan & Pandey (2010) examine the antecedents of self-reported use of performance information in the course of the performance management process. The study involved a survey of managers from US local government jurisdictions. Its theoretical underpinnings center on the organisational theory on information. The results of the study depicted that factors such as employee motivation, availability of information, leadership role, administrative flexibility and organisational culture significantly affected information use among employees in the course of the performance management process. This study offers invaluable contributions that organisational managers, stakeholders and policy makers can employ in order to enhance employee information use and the efficacy of their performance management systems. It accentuates on the need for organisational managers, stakeholders and policy makers to give priority of employee motivation, availing relevant informational resources and enhancing the flexibility of their administrative structure in order to enhance increase information use among employees. This study further highlights the importance of leadership/political support, goal-oriented cultures, employee involvement in enhancing the outcomes of performance management. Nevertheless, one of the key limitations of this study is that it is limited in scope since its findings are based on information from US local government jurisdictions thus it is questionable whether they can be applied in other levels of government or organisational settings. Therefore, there is need for future research studies to examine the antecedents for performance information use in different setting by testing different variable use both qualitative and quantitative approaches. Dewettinck, K. & Dijk, H. (2013). “Linking Belgian Employee Performance Management Systems Characteristics with Performance Management System Effectiveness: Exploring the Mediating Role of Fairness”. International Journal of Human Resource Management 24 (4), 806-825. Using a cross-sectional, single-source research design, his study examines the mediating role of fairness in the relationship between the characteristics of performance management systems (PMS) and their effectiveness as perceived by employees. Drawing on the control theory, expectancy theory and goal-setting theory, the researchers propose a model that postulates that perceived fairness mediates the link between PMS characteristics and their effectiveness as perceived by employees. The validity of this model is tested through a cross industry study involving a sample of 3129 employee where a structural equation modelling is used. Following this study it is concluded that fairness partially mediate the link between PMS characteristics and their effectiveness as perceived by employees. One of the key lessons that managers within the organisational settings can draw from this study is that the effectiveness of PMS largely hinges on the manner in which they are designed and executed. Therefore, proper design and implementation of PMS is key enhancing effectiveness. However, one of the main limitations of this study is that it is based on a narrow perspective on fairness since it focuses on appraisal fairness only yet there are other aspects of fairness envisioned in studies by Narcisse and Harcourt (2008) and Cropanzano, Bowen &Gilliland (2007). Therefore future studies should employ a more comprehensive outlook on fairness in order to investigate the mediating role of fairness in the relationship between PMS characteristics and their perceived effectiveness. Yeoh, W., Richards, G. & Wang, S. (2014). “Benefits and Barriers to Corporate Performance Management Systems”. Journal of Computer Information Systems, Fall 2014, 105-116 This research study explored the key benefits and barriers of employing Corporate Performance Management (CPM) systems. Following a survey of 283 organisations in North America and China, it was established that there are three key benefits of employing CPM systems. These systems were found to enhance strategy execution, fact-based decision making and process-efficiency. The study further found that some of the barriers of CPM systems include; cultural resistance, lack of management support, lack of design integration and the ineffective link between plans, strategy and budgets. One of the key implication that this study offers to managers is based on the notion that in order for organisations to benefit from the benefits of performance management systems, they should not only pay attention to project-related issues but also to organisational factors such as culture and the managerial support. Some of the limitations of this study lie in the fact its findings are based on organisations in China and North America and that it employs a cross-section research design to explore research issues which should be observed over long period of time. Therefore future research studies should employ a longitudinal approach and examine barriers and benefits of PMS in other regions. References Aguinis, H. (2007). Performance Management. New Jersey: Pearson Education. Armstrong, M. (2009). Armstrong’s Handbook of Performance Management: An Evidence-Based Guide to Delivering High Performance. Great Britain: Kogan Page Publishers. Becker, K., Antuar, N. & Everett, C. (2011). “Implementing an employee performance management system in a nonprofit organization”. Nonprofit Management and Leadership, 21 (3), 255-271. Bianchi, C. & RivenBark, W.C. (2012). “A Comparative Analysis of Performance Management Systems: The Cases of Sicily and North Carolina”. Public Performance & Management Review 35(3), pp. 509-526 Chartered Institute of Personnel and Development (CIPD) (2009). Performance Management in Practice: Current trends and Practice. Retrieved January 7 2015 Claus, L. & Briscoe, D. (2009). “Employee Performance Management Across Borders: A Review of Relevant Academic Literature”. International Journal of Management Review 11(2), 175-196. Cullen, J.B. & Parboteeah, P.K. (2009). International Business: Strategy and the Multinational Company. New York: Routledge. Demartini, C. (2013). Performance Management Systems: Design, Diagnosis and Use. London: Springer Science. Dewettinck, K. & Dijk, H. (2013). “Linking Belgian Employee Performance Management Systems Characteristics with Performance Management System Effectiveness: Exploring the Mediating Role of Fairness”. International Journal of Human Resource Management 24 (4), 806-825. Dubrin, A. (2008). Essentials of Management. Mason, OH: Cengage Learning Evans, G. E. (2004). Performance Management and Appraisal: a How-to-Do-It Manual for Librarians. New York: Neal-Schuman Publishers. Ferreira, A. & Otley, D. (2009). “The design and use of performance management systems: An extended framework for analysis”. Management Accounting Research 20, 263-282. Gillespie, T.L. & Parry, R.O. (2009). “Applying Performance Management Principles in the Management of Classroom”. Journal of Management Education 33(5), 533-576. Grote, D. & Grote, R.C. (1996). The Complete Guide to Performance Appraisal. New York: AMACOM Publishing. Kandula, S.R. (2006). Performance Management: Strategies, Interventions and Drivers. New Delhi: PHI Learning. Lawler, E. E. (2008). “Make human capital a source of competitive advantage”. Organizational Dynamics, 38, 1-7. Locke, E.A. & Latham, G.P. (2013). New Developments in Goal Setting and Task Performance. New York: Taylor & Francis. Halachmi, A.(Ed) (2005). Productivity and Performance Management. Bradford, UK: Emerald Group. Huprick, J. (2008). A Brief Introduction to Performance Management. Retrieved January 7 2015 Moynihan, D.P. & Pandey, S.K. (2010). “The Big Question for Performance Management: Why Do Managers Use Performance Information”. Journal of Public Administration Research and Theory 20 (4), 849-866. Murphy, K. R. & Cleveland, J.N. (1995). Understanding Performance Appraisal: Social, Organizational, and Goal-Based Perspectives. New York: Sage Publications. Murphy, K. R., & DeNisi, A. (2008). A model of the appraisal process. In A. Varma, P. S. Budhwar, & A. DeNisi (Eds.), Performance management systems: A global perspective (pp. 131 − 146). New York: Routledge. Noe, R. A. (2010). Employee Training and Development. New York: McGraw-Hill. Nzuve, S.N & Njeru, L.K .(2013). “Perceived Factors Affecting Performance Management among Local Authorities in Kenya: A Case Study of City Council of Nairobi”. DBA Africa Management Review 3(2), 59-69. Rooyen , M. (2014). Five Challenges in Implementing Performance Management. Retrieved January 7 2015 Sahoo, C.K. & Mishra, S. (2012)."Performance management benefits organizations and their employees", Human Resource Management International Digest 20 (6), 3-5. Sumlin, R. (2010)“Performance Management: Impacts and Trends”. DDI Whitepaper. Retrieved January 7 2015 Upadhyay, D. & Gupta, A. (2012). “Efficacy of Performance Management System: An Empirical Study at ICICI Bank”. International Journal of Advanced Research in Management and Social Sciences 1(3), 216-225 Vurma, A., Budhwar, P.S. & DeNisi, A.S. (2008). Performance Management Systems: A Global Perspective. New York: Taylor & Francis. Yeoh, W., Richards, G. & Wang, S. (2014). “Benefits and Barriers to Corporate Performance Management Systems”. Journal of Computer Information Systems, 14, 105-116. Read More