Despite the popularity of performance management systems in large organisations, there has been much controversy surrounding the effectiveness of such systems. Performance Management System is an important aspect of business and people management in an organisation but making it effective is a seemingly mammoth task that organisations faces. Performance Management is a strategic approach to management, which equips leaders, managers, employees and stakeholders at different levels with a set of tools and techniques to regularly plan, continuously monitor, periodically measure and review the performance of the organization in terms of indicators and targets for efficiency, effectiveness and impact. This system should ensure that all the leaders, managers and individuals in the organization are held accountable for their actions which should bring about improved service delivery and value for money.
There is a growing realisation among managers of many organisations for the need to formulate an effective performance management system that supports the vision and mission of an organization. It is quite a pit that many organisations are still struggling to design performance management frameworks that can effectively support the strategic goals of an organization and at the same time ensuring that the expectations of the employees are also met.
Armstrong and Baron (2005), defines performance management as a strategic and integrated approach to delivering sustained success to organisations by improving the performance of people who work in them and by developing the capabilities of teams and individual contributors.
Brewster et al (2003), declare that performance management typically involves ―the setting of performance objectives, the measurement of performance against these objectives, the identification of developmental support and a review process to develop performance and subsequent objectives.
Fletcher and Williams (1996), describe the process of performance management in general as being associated with an approach to creating a shared vision of the purpose and aims of the organisation, helping each employee to understand and recognise their part in contributing to them, and in so doing to manage and enhance the performance of both individuals and the organisation.
According to Ferreira and Otley (2009), an effective Performance Management System must be linked to the organisational strategy during strategic planning and design. To implement the strategy or performance management system, an organisation needs to ensure that it has drawn up its vision, mission, goals and supporting objectives. Ferreira and Otley (2009), state that performance management begins with its purposes and objectives. According to Bruden (2010), performance management is a discipline that assists an organisation in establishing, monitoring and achieving individual, team, departmental and organisational goals.
Related: Is a performance management system worth it?
What is the role of performance management in an organisation?
According to Bruden (2010), if properly implemented performance management plays the following roles:
It plays the role of supporting the processes of strategic decision making, planning and control (Busco et al., 2008). Within these processes, performance measurement can provide managers with a common language informed by accounting and non-accounting measures and information that is spread across the different parts of the business units in the organisation.
It is a continuous cyclic process of performance plans, performance evaluation, performance evaluation results in application and performance target improvement for the managers and the staff to achieve the organisation’s objectives. It is seen as a process in an organisation rather than just a once-off event (Guanying et al., 2010).
It can be used as a strategic and integrated approach in improving the performance of the employees by developing the capabilities employees and ultimately leading to the sustained success of the organisation (Gliddon 2004). It is also used to control the behaviour of the PT (Broadbent, 2009), which include:
- Planning work and setting expectations,
- Continually monitoring performance,
- Developing the capacity to perform,
- Periodically rating performance in a summary fashion and
- Rewarding good performance
Besides that performance management saves the following purposes:
- It identifies major or systematic blockages and guides future planning and developmental objectives and resource utilization in the organisation
- It provides a mechanism for managing expectations and ensuring increased accountability
- It provides early warning signals to identify problems in meeting the organisational strategies
Related: Guidelines for automating your performance management system
What are the enablers of performance management?
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The Oxford English Dictionary (2011), defines enablers as - to supply with the means, knowledge or opportunity or to make possible.
For example, Steel and Mento (1986), stated that a motivational model which views performance management as a function of the interactions of willingness (i.e., motivation), capacity (i.e., ability), and opportunity (i.e., situation) to perform effectively.
Armstrong and Baron (2005), suggest that line management commitment and capability is probably the most important enabler of performance management systems.
They suggest eight approaches to achieving commitment and capability being:
- to provide leadership from the top;
- involve line managers in the design and development of performance management processes;
- use competence in performance management as a key criterion in assessing managers‘ performance;
- use 360-degree feedback or upward assessment to assess the performance management abilities of line managers
- take corrective action as required;
- survey the reactions of employees to performance management regularly and take action to deal with weaknesses;
- provide systematic training in the performance management skills managers need to use, and to provide continuous coaching and guidance to individual managers to supplement formal training
Related: Performance Management Tools: Things you need to know
What are the inhibitors to performance management?
The Oxford English Dictionary (2011), defines inhibitors as - to slow down, prevent or reduce a particular activity. They are quite a several factors among other factors that act as impediments to the design and implementation of a performance management system. Research conducted in the United States in the late 1990s showed that the majority of respondents, usually human resources professionals, were dissatisfied with their performance management systems (Coens and Jenkins, 2000).
- Failure to establish a consistent responsibility structure that provides clarity and consensus about the role and responsibility of corporate headquarters and business units; and a balance between strategic and financial control
- Inability to balance the long term and the short term focus which indicates that organisations have difficulty in turning their strategic intent into activities that achieve strategic goals.
- Failure to make value-based strategies operational
- Failure to focus on what is truly important and concentrate on trivial issues
- Failure to enforce performance-driven behaviour
Radnor and McGuire (2004), discovered that one of the inhibiting forces is the role of managers being far more administrative than managerial particularly about performance management and that to achieve or respond to the various stakeholder's staff spend their time filling forms and chasing information rather than changing or managing the process.
Related: Performance Management Goals: What you need to know
Conclusion
Given this background, any progressive organisation must develop a performance management system that is aligned with its strategy and consistently reviewed to check if it is effectively implemented. It is also important to note that they are some factors that militate against the implementation of a performance management system that needs to be addressed when designing such a system.
Sources
ADLER, R.W., 2011. Performance Management and Organisational Strategy: How to
Design Systems that Meet the Needs of Confrontation Strategy Firms. Journal of British Accounting Review.
FERREIRA, A. and OTLEY, D., 2009. The Design and Use of Performance
Management Systems: An extended framework for analysis. Journal of Management Accounting Research(2009).
Newturn Wikirefu is the Talent Acquisition Manager at Industrial Psychology Consultants (Pvt) Ltd a management and human resources consulting firm.
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