Introduction
Performance management describes a continuous process of managing employees’ performance to achieve the desired results. All high performing organizations need efficient performance management systems that will develop and promote competencies, values, and principles necessary to sustain optimal productivity (Sahoo and Mishra, 2012). Performance management entails activities such as joint goal setting, rewarding achievements, continuous progress review, implementing employee development program, frequent communication, and training and development for improved performance. It can also be described as a systematic process through which the overall organization’s performance can be maximized by enhancing the productivity of individual within the team framework. All in all, it is a technique of identifying and promoting a superior team in the workforce through enhanced feedback, job descriptions, and performance improvement plans (Sahoo and Mishra, 2012). It is important to evaluate the effect of performance management practices on both employers and employees.
An effective performance management system works towards the improvement of the entire organization performance by controlling and enhancing the performance of teams and individuals towards achieving organizational goals and ambitions. Additionally, it will ensure that employers and employees know the significance of their contributions toward organizational objectives and goals. It also involves ensuring that each employee understands their roles and responsibilities in the organization. Furthermore, employers must also evaluate whether each employee has the necessary risks to fulfill their roles and responsibilities. Additionally, performance management ensures proper linking and aligning of individual goals with the overall organization goals while fostering effective communication within the organization. It is important to realize that performance management can also facilitate a harmonious and cordial relationship between managers and employees based on empowerment and trust (Van Dooren, Bouckaert, and Halligan, 2015). Initially, reward-driven approaches were one of the main characteristics of performance management. However, modern-day approaches have slowly shifted to learning and development at the workplace to achieve a productive workforce.
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Importance of Job Descriptions
An employee’s job description is one of the most important aspects of an employee’s development plan. They establish a base through which they can clearly understand their roles and what they need to develop so that they can make a positive contribution to the organization (Jain and Gautam, 2014). Moreover, job descriptions offer an opportunity to communicate clearly about an organization’s short and long term goals while highlighting the roles of employees in the long term goal and setting achievable goals.
Components of Performance Management
As mentioned earlier, performance management develops a work environment where employees can offer maximum productivity. It is an effective process that should begin during job designing, and its expectations should be clearly communicated and understood by the employee (Van Dooren, Bouckaert, and Halligan, 2015). An effective performance management system comprises of:
A clear job design
An effective recruitment and selection process
Performance-based measures and outcomes
Efficient orientation, training, and education
Coaching and feedback
Regular performance development discussions
An efficient recognition and compensation system
Employee Improvement Plans
Most businesses spend inadequate time identifying goals and measurements for employees’ performance. It is important to note that performance reviews may be an inefficient reflection of employees’ performance because they rarely focus on employees’ achievements based on measurable goals. Also, they focus on recent outcomes while ignoring employees’ performance in the entire financial year. Hence, they may lack objectivity. However, performance management systems facilitate the development of a performance improvement plan (PIP) that are designed to facilitate effective discussion and feedback between supervisors and staff members to clarify their work performance (Jain and Gautam, 2014). The human resources department and supervisors should review all PIPs to ensure fair and consistent treatment of employees in the entire organization. Moreover, the supervisor should monitor, evaluate, and provide feedback to employees regarding their performance based on the PIP (Jain and Gautam, 2014). The supervisor should ensure they review the following issues with employees:
The performance standards that the worker should consistently maintain
The resources and supported that will be offered to an employee
Feedback plans for both supervisor and employee
The possible outcome or consequences for the employee if they do not meet the necessary performance standards
Sources of additional information to employees, such as company policy, standing orders, and employee handbook
Feedback Mechanism
A well-integrated performance management system ensures that there is a 360-degree feedback mechanism that offers quality feedback from supervisors and employees. Effective communication and feedback ensure that individuals within a team are accountable to each other (Ying, 2012). A 360-degree feedback mechanism is one of the most effective techniques for understanding organization and personal developmental needs. Furthermore, most employees believe that a 360-degree feedback mechanism is more efficient and accurate while providing a clear picture of their performance. Additionally, it validates feedback from supervisors. It is important to note that quality feedback can assist reduce discrimination based on gender, race, or age because of feedback from different sources (Ying, 2012). Furthermore, it offers more comprehensive and detailed information about a company's training and development needs.
A Productive Workforce
One of the benefits of employee retention and motivation is that it allows workers to develop career and job-enhancing skills. It provides an opportunity for employees to develop through the entire process. Also, performance management ensures that employers possess the necessary managerial skills that will help them create competitive advantages (Ying, 2012). Due to the increasingly competitive nature of global businesses, employers should ensure their performance management systems address the following issues:
Creating a systematic and documented hiring process
Providing the necessary managerial needs to align the needs of a productive workforce and an organization’s desired outcomes
Having quarterly performance development reviews and planning meetings that will align goals, direction, and measurements.
Providing regular feedback
Developing a recognition system that will evaluate and reward employees for their real contributions
Providing development, training, and education that will create a superior and productive workforce
Impact on Employees
A skilled and talented workforce is the foundation of every successful organization. Performance management practices ensure that employers get the right employees with the necessary skills and talent (Ying, 2012). Many organizations treat performance management as an annual event involving the announcement of financial results. However, various researches show that companies that have a continuous focus on performance management often achieve better business outcomes. Also, it shows that companies whose employees review or revise their objectives and goals frequently or quarterly are:
About 45% more likely to achieve above average financial performance (Ying, 2012).
Approximately 60% more likely to reduce production costs at levels below that of their competitors (Ying, 2012).
Performance assessments and appraisals form only a segment of the entire performance management process. For an organization to build a skilled and empowered workforce, it must do more than simply auditing employee achievements. Organizations should focus on creating a management cycle where performance appraisal is not the main focus. Continuous improvement and support should be the primary objective (Ying, 2012). Some of the benefits include:
Goal Setting and Revision
It will ensure that every employee has a clear understanding of their work roles and responsibilities. They will also understand the context, which describes a proper understanding of their role in an organization and how they should contribute to the short and long term success of the organization. Goal setting starts with the executive and board of directors, which then cascades to managers, individual, and team goal setting (Qureshi and Hassan, 2013). Aligning the entire workforce with high and achievable goals will set clear direction and priorities, which ensures that each employee feels ownership in the organizations through personal objectives.
Management and Coaching
Although some goals may require readjustment, it may also mean that employees do not have the necessary skills to achieve the goals (Qureshi and Hassan, 2013). Performance management plays a crucial role in identifying gaps in workers’ skillsets. However, it is self-defeating to identify gaps without providing alternatives or solutions. After identifying the gaps, employees are trained, and they acquire new skills or improve their previous skillsets (Qureshi and Hassan, 2013). Improved employee engagement and performance is the outcome of consistent coaching and feedback. Some companies identify and hire potential instead of experience so that they can provide adequate training and development programs that will address skill and performance gaps.
Development Planning
Performance management systems ensure that employees have regular and quality feedback on their individual performance while providing highlighting specific areas where they should improve. After identifying particular skill gaps, employees have a specific and clear insight regarding the skills they should develop if they desire to progress in their careers (Qureshi and Hassan, 2013). Additionally, it ensures that employees know the objective of performance management and its role in performance development and career progression. Companies that assign training according to performance reviews tend to experience a 38% better employee engagement and 61% greater talent pool with ready and willing successors (Qureshi and Hassan, 2013).
Rewards and Recognition
Performance management assists employees to receive a proper balance of negative and positive reviews. It is important to note that most employees prefer being praised and motivated rather than constant negative feedback. A little unexpected feedback can play a critical role in employee motivation. Furthermore, it satisfies the fundamental human need of being praised while reinforcing the right culture and behavior and leveraging social engagements (Qureshi and Hassan, 2013). Moreover, recognition and rewards are essential tools in employee engagement and retention, which creates a group of employees who know and support the corporate culture.
Increased Focus on Achieving Business Results
Since performance management aligns individual goals with the overall organization goals, an employee’s daily activities are aligned to support the organization’s mission (Gruman and Saks, 2011). It promotes a continuous focus on core business activities and driving profitability.
Engaged and Empowered Workforce
Performance management aligns different individuals to support each other through teams. Therefore, companies can enhance employee engagement through teamwork and create an accountability culture for career progression and development (Gruman and Saks, 2011). Additionally, when employees are engaged in different decision-making processes, they will feel appreciated and they will be more willing to improve their individual performance.
Foundational Knowledge of Talent
As mentioned earlier, performance management allows organizational leaders to evaluate their employee’ skills and abilities. After evaluating their abilities and skills, the management ensures that all workers get the correct feedback and information necessary to succeed (Gruman and Saks, 2011). By identifying high and low performance, the organization can monitor the efficiency of orientation, training, and development programs.
Impact on Employers
Developing Leaders
Research shows that when leaders are perceived to be effective, over 72% of workers were highly engaged (Jones, 2018). Leaders who utilize performance management take time to inspire their employees while understanding what motivates them. Furthermore, they drive personal and business growth by fostering an environment where employees feel comfortable enough to communicate, experiment, and support each other. However, not every individual is born to be a natural leader, and others require ongoing support and training to lead an organization effectively. Businesses can assist by providing leaders with the necessary support, tools, and coaching to foster employee development and build strong relationships with other stakeholders (Jones, 2018).
Encourages Leaders to Foster Stronger Bonds with Employees
Research shows that the most successful companies have frequent discussions with their employees regarding their performance. Performance management encourages leaders to develop stronger relationships with their employees through ongoing conversations. The approach develops greater trust and allows for effective and honest discussions about employees’ lives in and out of the work environment. By creating a work environment that supports regular discussions and conversations, employers or leaders open themselves up to developing strong relations with team members (Jones, 2018). Furthermore, it places employers in a better position to encourage, manage, and correct performance.
Developing a Feedback Mechanism
Every employer or manager likes to know if they are doing a good job. Performance management encourages leaders to develop good communication with their employees so that they can get adequate feedback on various decisions in the company. Research shows that over 55% of employees believe that feedback is one of the main factors influencing job satisfaction (Jones, 2018). By providing and receiving continuous feedback, employers know which actions will work for the organization. Furthermore, it provides leaders with access to techniques and tips for receiving and giving feedback and recognition that best suits personality style and communication patterns of each employee (Moynihan and Pandey, 2010). Furthermore, personalizing communication plays a critical role in motivating employees.
Establishing a Positive Corporate Culture
A study carried out in 2016 indicated that over 80% of new graduates expected their first employer to give them orientation and formal training (Jones, 2018). However, only 54% of new graduates receive formal training from their employers (Jones, 2018). It is important to note that employers can boost job satisfaction while recruiting and retaining top talent by offering employees the necessary space to develop their skills. Performance management programs educate leaders regarding the importance of creating space for workers to pursue training and development so that it can help them develop critical skills (Moynihan and Pandey, 2010). Training and development help employees to acquire skills necessary for future responsibilities while helping the organization to build loyalty and competitive advantages (Jones, 2018).
Making Work Meaningful
Performance management encourages employers to show employees how their work contributes to the overall success in the organization. When employees know where they fit in the organization, they are more likely to be motivated and engaged in improving their performance. However, about a third of employees feel that they receive limited information about their input and role in the organization’s strategy (Noe et al., 2017). Also, performance management encourages employers to assist employees in aligning their individual goals with the organization’s overall objectives while clearly communicating the organization strategy to all employees. Ultimately, employers will position themselves to better solve the employees’ daily needs by connecting their day to day activities with performance management.
Conclusion
The essay has evaluated the effect of performance management practices on both employers and employees. As mentioned earlier, performance management describes a continuous process of managing employees’ performance to achieve the desired results. As competition gets more extreme globally, one of the main strategies of a successful organization is attracting and retaining talented employees while developing a highly motivated and productive workforce. Performance has always been the main measure of success. It is important to note that performance management allows the company to identify skill gaps within the organization so that they can train employees and improve their skills while preparing them for future responsibilities and career progression. More companies are relying on performance management systems to retain and develop new competitive advantages. Furthermore, performance management ensures that employees know their role in the overall organization strategy while ensuring managers and supervisors align employees’ goals and behaviors towards the desired objectives. Additionally, performance management helps an organization to develop leaders who know their role in the organization and can maximize employees’ output. Also, it fosters strong relationships between employers and employees. Ultimately, performance management boosts both employers and employees' productivity.
References
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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.
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Qureshi, A., & Hassan, M. (2013). Impact of performance management on the organizational performance: An analytical investigation of the business model of McDonald's. International Journal of Academic Research in Economics and Management Sciences , 2 (5), 54.
Sahoo, C. K., & Mishra, S. (2012). Performance management benefits organizations and their employees. Human Resource Management International Digest , 20 (6), 3-5.
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