Assignment 83

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7: Performance Management

Dr. Mirna Safi

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Introduction

Performance management is important for the organization to track its progress and ensure it achieves its objectives.

It is also important for employees as it provides them with a platform to monitor their progress and it can enhance their engagement at work.

There is severe difficulty in ‘getting it right’ in organizations and it continues to be a topic of major interest for academics and practitioners alike.

Enhancing performance through performance management

Performance management: “a process for establishing shared understanding about what is to be achieved, and an approach to managing and developing people in a way which increases the probability that it will be achieved in the short and long term” (Armstrong, 2003, p.479).

Performance appraisal usually consists of an interview that takes place between employees and their managers to review the employees’ performance and set future goals.

Enhancing performance through performance management

Managing performance is important for both managers and employees alike.

For managers, it enables them to clarify key organizational goals and priorities, measure subordinates’ work performance and motivate them by recognizing achievements.

For employees, performance management enables them to learn what is valued by the organization, communicate their views about the job and identify career and training development needs.

Enhancing performance through performance management

According to goal setting theory setting goals which are specific and challenging yet attainable can result in motivation to increase performance (Locke and Latham, 1990).

Setting important and attainable goals to which employees are committed and providing feedback are pivotal to performance management.

SMART framework – ensure goals are specific, measurable, attainable, realistic and timed.

Setting goals which can be effectively measured proves extremely difficult for organizations time and time again.

Goal-setting theory

Helps to explain why a lot of workers lack motivation in their jobs and do the minimum necessary to get by (Vroom, 1964).

It suggests that employees’ motivation to perform is based on a combination of three factors:

(E) Expectancy - work effort will be followed by a given level of task performance

(I) Instrumentality - a given level of achieved task performance will lead to various work outcomes

(V) Valence the value attached by the individual to various work outcomes

Assumption of a rationality with respect to how the individual thinks and behaves, which does not always materialise in reality.

Expectancy theory

Refers to the comparison between inputs (what an individual brings to employment, such as effort and performance) and outputs (factors received in return for inputs, such as reward and recognition)(Adams, 1963).

Focuses on how fairly employees have been treated in comparison to others.

When there is a perceived inequity in the employment relationship, the individual tries to restore equity by either distorting their inputs (e.g. reducing effort and performance levels), disregarding the comparable other (i.e. a fellow employee) and referring to a new one, or terminating the relationship.

Equity theory

SHRM can enhance performance by creating a high performance culture and by aligning the performance management strategy with the business strategy.

This ensures that employees act in ways that are beneficial to the organization as the role behaviours required to deliver on the strategy are encouraged and reinforced.

Enables organizations to identify talented employees so that they can be effectively rewarded and thus retained.

Enables underperformers to be identified so that corrective action can be taken.

HRM and organizational performance

Enhancing engagement through performance management

Engagement reflects the extent to which employees demonstrate energy, dedication and immersion in their work.

There are many reasons to expect that a well-designed performance management system can enhance employee engagement.

It can create meaning and interest for employees in performing their work as it focuses on intrinsic motivating factors .

The important role of feedback in creating meaning.

Must be carried out in a way which adheres to the principles of trust and fairness.

Performance management schemes used in organizations

The performance appraisal interview usually consists of a discussion between an employee and their line manager about the employee’s performance and any concerns that both parties may have.

Some of the most commonly used metrics or techniques include:

Rating

Ranking

The critical incident technique

180-degree feedback

360-degree feedback

Competency-based assessment.

Performance management pitfalls and underperformance

Performance management pitfalls

Involves monitoring and controlling employees, and making decisions which can profoundly impact their careers.

The prevailing ideology is that managers are simply implementing regimes of surveillance to control employees.

Employees may feel that the constant targets and pressures are too much to cope with, thus leaving them fed up, stressed and even burned out.

Central focus given to rating employees.

Feedback will not always be accepted and embraced.

Performance management pitfalls

Grote (1996) pointed out numerous human biases among raters which can plague the performance appraisal interview:

The contrast effect

The first impression error

The recency effect

The halo effect

The similar-to-me effect

Central tendency bias

Negative and positive skew

Attribution bias

Stereotyping.

Overcoming performance management pitfalls

Armstrong (2006) offer the following advice to ensure success:

Ensure that the appraiser is adequately trained

Ensure that line managers and employees are involved in the design

Ensure performance management is an open system visibly owned by senior management

Ensure performance management has an ease of administration associated with it

Ensure there is always a follow up on the appraisal actions.

How to manage underperformance

Managing underperformance should be about ‘applauding success and forgiving failure’ (Handy, 1989).

Disciplinary procedures should be considered as an option of last resort.

Armstrong (2009) advances five basic steps to manage underperformance:

Identify and agree the problem

Establish the reason(s) for the shortfall

Decide and agree on the action required

Resource the action

Monitor and provide feedback.

How to manage underperformance

Identifying performance problems early involves asking questions about how SMART the goals were:

Did the objectives gain the commitment of the employee?

Were specific measures that would facilitate the identification of performance problems included?

Are managers frequently engaged with employees to review progress and provide feedback?

For underperforming employees coaching is useful for instilling confidence or self-efficacy in employees which can ultimately help them improve.

Thank you for Listening!