Essay
Lilyb660
Chapter8.pptxChapter 8: Performance Management
HRM330: Strategic Human Resource Management
Boselie, P. (2014). Strategic Human Resource Management: A Balanced Approach. McGraw Hill. 2nd Edition
Outline
1 Introduction
2 Defining performance appraisal
3 Definitions of PM
5 PM and HRM
6 Goal setting theory
7 The role of the supervisor
8 360-degree feedback systems
9 Lean management and six-sigma
10 PM and procedural justice
11 PM and distributive justice
13 PM and balanced approaches
15 The strategic relevance of PM
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1. Introduction
PM is another important high-performance work practice (HPWP) that can be applied to inform, guide, monitor and evaluate employees to achieve organizational goals
Performance Management (PM) provides direction and stimulates employee motivation
Creating a high-performance organization starts with an organization strategy and goals
Together with other HPWPs, such as selective recruitment, selection, compensation, development and employee participation, PM is an intervention that can positively affect HR outcomes
ex. employee motivation, organizational citizenship behaviour and organizational commitment
PM tends to represent the ‘hard’ HRM approach which is mainly focused on the employer’s and shareholder’s interests
There is, however, a growing awareness of the importance of ‘soft’ elements in PM aimed at employee well-being
Successful contemporary organizations apply strong PM systems monitoring individual, group and business unit performance, but at the same time creating a corporate culture and a guideline for employees on how the work should be done
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2. Defining performance appraisal
According to Cardy and Dobbins (1998: 470), PA ‘is the process of identifying, observing, measuring, and developing human performance in organizations’
The outcomes of the assessment can, and should, be used to improve future performance
One way of doing this is employee development
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3. Definitions of Performance Management (PM)
PM can be seen as a broad range of activities that create a bridge between managing employee performance and enhancing overall organization performance
PM thus ‘deals with the challenge organizations face in defining, measuring, and stimulating employee performance with the ultimate goal of improving organizational performance’ (Den Hartog et al., 2004: 556)
This view is upheld by DeNisi (2000), who maintains that PM refers to the range of activities an organization engages in to enhance the performance of a target person or group, with the ultimate purpose of improving organizational effectiveness
PM is a continuous process involving performance reviews focusing on the future rather than the past
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3. Definitions of PM (Continued)
Alongside the variation in content of a PM system, according to Baron and Kreps (1999), PM can also have different purposes, including:
An extensive evaluation to improve job matching
Communication of corporate values and objectives
Providing information for self-improvement, training and development, and career development
Linking pay to individual and/or team performance
Collecting information for hiring strategies
Validating HR practices, including appraisal and rewards, retention and reductions in workforce
Input for legal defences
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3. Definitions of PM (Continued)
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5. PM and HRM
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6. Goal setting theory
A goal is ‘what an individual is trying to accomplish; it is the object or aim of an action’ (Locke et al., 1981: 126)
Performance goals have a motivational impact in organizations (Kreitner et al., 2002)
Most important findings of the goal-setting theory (Locke et al., 1981):
The more difficult the goal, the greater the achievement
The more specific or explicit the goal, the more precisely performance is regulated
Goals that are both specific and difficult lead to the highest performance
Commitment to goals is most critical when goals are specific and difficult
High commitment to goals is attained when (a) the individual is convinced that the goal is important and (b) the individual is convinced that the goal is attainable
Goal-setting is most effective when there is feedback showing progress in relation to the goal
Goals stimulate planning
Performance-related Pay (PRP) is often linked to goal-setting theory as an incentive for goal achievement
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6. Goal setting theory (Continued)
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7. The role of the supervisor
Managers put PM into practice, and by doing so will affect employees’ perception as well as their commitment, motivation and trust
In an ideal situation managers set challenging yet attainable objectives, appraise performance and give feedback. They ensure possibilities for subordinates’ development and stimulate a climate in which high performance is stressed
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8. 360-degree feedback systems
The evaluations or ratings can be collected from the direct supervisor, peers, subordinates, or a combination of these sources (Bracken, 1994)
The inclusion of multiple raters supports the reliability of the measurement
The selection of raters is crucial and avoidance of ratees nominating ‘friendly raters’ is necessary
It is also important to make the ratings anonymous
Raters should be trained to use the feedback system
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9. Lean management and six-sigma
Lean management and Six Sigma are linked to HPWSs’ approaches
These approaches are PM systems aimed at improving organizational performance
Teamwork, continuous improvement, individual and team responsibility, a long-term philosophy, standardized tasks, visual controls, leadership development (LD), employee development towards quality and efficiency standards, and consensus-driven decision making are key characteristics of lean management principles that fully match the PM systems
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10. PM and procedural justice
Two types of perceived justice are discussed: procedural and distributive
Procedural justice deals with the fairness of the procedures used to determine outcome distributions or allocations
Perceived procedural injustice by ratees (employees) can be minimized when the ratees or evaluated employees (Bracken, 1994; Locke, 2003; Noe et al., 2006):
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11. PM and distributive justice
Distributive justice concerns people’s perception of outcomes or rewards and the way they are allocated (Baron and Kreps, 1999: 107)
This form of justice is relevant for workers’ satisfaction with decisions concerning their jobs and pay
Perceived distributive injustice can be minimized by:
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13. PM and balanced approaches
PM is an HPWP that may disturb the balance between the employer’s and the employee’s interests
The performance and goal orientation of PM easily become too focused on practices (e.g. individual PRP and close monitoring by the direct supervisor) and outcomes (e.g. productivity, quality, sales and profits) that mainly serve the employer’s and shareholders’ interests
To restore the balance, an ideal PM system also pays attention to ‘what employees want’
reflected in opportunities for personal development, an optimal work–life balance through flexible working arrangements, employment security through permanent contracts and fixed pay, extensive employee involvement or participation in PM (e.g. self appraisal), subordinate appraisal, etc.
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15. The strategic relevance of PM
PM can be the bridge between the overall business goals and the specific goals of every individual employee
PM represents a sort of mini-HPS in which the alignment of individual practices strengthens the achievement of the individual employee goals and the overall business goals
Goals at the individual employee level and business goals are the guidelines for employee behaviour and their orientation towards certain achievements
The strategic relevance of PM is mainly in the creation of opportunities for business awareness at all levels, focus and concrete targets, employee motivation and employee engagement.
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