assignment 9 - organization

ABSTRACT

Performance Management System (PMS) is important for organizations. The essence of PMS should

be clearly understood by the employees working with different responsibilities. Clarity, acceptability,

space for incorporating modifications, scope for employee development and similar features should

be there with PMS. In this study, association of PMS with Job Satisfaction (JS) has been explored

which reveals a positive and significant association. The essentiality of PMS viewed by the employees

for the development of employees as well as for the organization is also the finding by the researchers.

Sense, Essence and Essentiality of Performance Management System - An Analysis

*Dr. Sitansu Panda - **Mr. Prasanna Kumar Pradhan

* Senior Lecturer, Faculty of Industrial Management, Universiti Malaysia Pahang.

** Executive Director, Kingston P.G.College, Hyderabad.

Introduction

Performance Management System (PMS) plays a vital role in managing the performance of an

organization. It ensures the understanding and creating importance among the employees through

contribution to organizational goals. And such system also facilitates harmonious relationship at the

workplace creating team spirit and mutual trust among the employees. A great deal of employees’

effort is driven to organizational success through PMS. Acceptability and integrity with organization

values, fascinated by the organizational aroma and development of high performance work teams are

possible by effective HR system from which PMS attributes a major credit. The successful

implementation of strategy, policy measures depends on the organizational members as their

perceptual values get carry forward for achieving the organizational objectives through their contribution

at workplace. The Performance Management System along with different factors attribute to Job

Satisfaction (JS) which lead to enhancing employee performance. In this context, it is quite pertinent

to explore the relationship between PMS and JS which has been studied in this research.

Review of Literature

The functions of Performance Management System (PMS) include performance appraisal process,

entering partnership with external consultants, decisions to allocate financial resources for incentives

and aligning goals with organization’s strategic goals. The study results that overall functions of

PMS has a significant positive impact on alignment. The financial support has also an impact on

PMS function. The main activities of PMS include performance management system needs, job

71Journal of Contemporary Research in Management n Vol. 11; No. 2 n April - June, 2016

72 Journal of Contemporary Research in Management n Vol. 11; No. 2 n April - June, 2016

evaluation, performance appraisal process, employee compensation and rewards (Sripirabaa &

Krishnaveni, 2009). The HR practices should be designed and implemented looking into the suitability

of the organization specific and to be employee friendly. The essence of PMS needs to corroborate

the interests of different organizational members. PMS is aimed at improving the performance of

employees and enhancing organizational performance (Huselid, 1995; Koch and Handley). Managers’

emphasize the function of PMS as a process which include designing, integrating, appraising and

rewarding employee performance (DeNisi and Pritchard, 2006). The exorable linkage of individual

and organizational performance is important Employee perception of HR practices mediated the

relationship between HR system and HR outcomes (D. Hartog, C. Boon 2013). In the generic framework

of performance management, interests of organization, market, values, culture and stakeholders

need to be integrated (Anderson et.al. 2006). Communication is one of the key success factors in

performance management in organizations (B. Josef, B. Leist, 2013). The goals of the performance

management system should congruent with organizational and employee goals. It has been revealed

that performance measurement and management in organizations experience implantation problems

including goal congruence (Taticetri, Balachandran and Tonelli, 2012). PMS is interpreted as a broad

set of functional activities encompassing performance appraisals, feedback, counseling, coaching,

career planning, rewards and training & development (T & D). The process of performance appraisal

links exhibited performance and expected performance in organization (Wood, 1999). The actual and

potential performance of current and future employees are measured through performance appraisal

which are executive by managers (Bartram, 2004). Performance management is a key aspect of

organizational functions. The employees’ performance has to be linked with HR functions and

organizational performance (R Lanspury, 1998; Kohli, 2008; Panda, 2014). Performance management

is to manage the work behaviour. It follows a data guided approach (Danich & Rosen, 1984), and

effective achievement of organizational goals and objectives through the process of identifying,

evaluating and developing the employees’ performance (Lansbury, 1988). The paradigm shift in the

field of performance management and measurement from financial aspect to integrative and operative

perspective to strategic one has been viewed in last two decades. The necessities of performance

management in different periods of time and in order to tune the organizational performance to meet

the changing business environment; dynamics and effective performance measurement systems

have been developed (N. Yadav and M. Sagar, 2013). Performance management has been covered in

many fields like operations management, management accounting, strategic management,

organizational management. There is an increase in research interests in the performance management

and measurement area (Taticchi and Balachandran, 2008). Performance management is a process

for managing the performance of a company in congruence with corporate and functional strategies

and objectives for which performance management is a key function (Lebas, 1995). A sound

performance should identify and describe essential job functions and relate to company’s goals,

develop realistic and appropriate standards for measurement of performance, provide feedback

unbiased specify constructive appraisals with scope for development of employees (Kohli, 2008;

Chadha, 2009). The essence of PMS and its expectations can be achieved through collaborative and

mutual trust. The key role of an organization is played by Performance Management System as it is

a means of getting the better results from an organization its working teams and employees (M.

73Journal of Contemporary Research in Management n Vol. 11; No. 2 n April - June, 2016

Armstrong, 2010). PMS creates a work environment for the organizational members to exhibit their

best of their abilities (Snell, Bohlander and Vohra, 2012). PMS should ensure goal congruence in

organization (Sharon Pande et. al. 2012). The process followed in PMS expects the desired outcome to be achieved and enables an organization to complete in the market and such performance management system is really vital for managing employees’ and organizational performance (Rao, 2007). There are certain characteristics like congruence, specificity, meaningfulness, standardization, openness, ethicality, acceptability, practicality change, evaluating criteria should be there with PMS to be successful (Aguinis, 2009; Kohli, 2008).

It is revealed in different studies about the importance of PMS for an organization. The characteristics

of the PMS should be understood by the employees. The intrinsic nature of Performance Management

System (PMS) should reflect the organizational expectancy from the employees. The policy,

objectives, methods, overall mechanism of PMS should be clearly communicated to the employees.

Better idea of PMS among the employees help in minimizing conflicts and achieving the department

and organizational goals.

The study has explored the relationship between Performance Management System (PMS) and Job

Satisfaction (JS). It is quite pertinent to discuss Job Satisfaction and relevant studies. Job Satisfaction

refers to job situation of an individual addressing to past and present situations in organization

(Locke, 1976). Important components of Job Satisfaction include pay, relation with co-workers,

supervisors and job security, recognition, autonomy, work environment and desired job (Cross, 1973;

Scarpello & Campbell, 1983; Khaleque & Rahman, 1987). According to Smith et al. (1969), job

satisfaction has work, pay, promotion, supervision and relationship with co-workers are the constituents

of Job Satisfaction. In their study, Hackman & Oldham (1975) viewed Job Satisfaction is composed

of certain elements viz; job security, pay, social relations, supervisory and growth of employees in

organization. It is revealed that job satisfaction is the indication of the extent of happiness of an

employee and the degree of satisfaction can be improved by changing attitude towards the job or

changing to a new job environment (Macdonald and McIntyre, 1997). In a study conducted on the

association between Performance Management System and Job Satisfaction by T.Y. Mallaiah (2008),

the motivation-performance-satisfaction linkage was emphasized and indicated that Job Satisfaction

as one of the key criteria for the establishment of healthy organizational structure. And the study

suggested for improving physical, social and psychological conditions in the workplace to improve

job satisfaction among the employees.

Scope and Objectives

This research is conducted in a Paper producing company located in Southern India. The samples

collected have been grouped based on three demographic variables viz; age, experience and promotion.

The study has the following objectives.

n To investigate the association between Performance Management System and the Job

Satisfaction among the employees.

n To explore the importance of Performance Management System being viewed by the employees.

74 Journal of Contemporary Research in Management n Vol. 11; No. 2 n April - June, 2016

Hypothesis

H0: There is no association between Performance Management System (PMS) of the company and Job Satisfaction (JS) among the employees.

H1: There is association between Performance Management System (PMS) of the company and Job Satisfaction (JS) among the employees.

Research Methodology A questionnaire survey method was used to seek responses from managers, supervisors and workers engaged in a paper manufacturing company, India. The necessary and relevant data were collected based on a validated instrument from the participants in the study. The secondary sources were explored and referred in this research. The six dimensions of Performance management System model (M. Armstrong, 2009) were taken in this research. The study adopted simple random sampling method. The researchers conducted a pilot study using a preliminary draft questionnaire. Reliability of the variables was ensured by examining the Cronbach’s alpha coefficient value which is 0.78 which is considered to be acceptable. The questionnaire has four sections. The first part contains the questions relating to demographic details of respondents, second part contains the items relating to Performance Management System (PMS) based on the scale developed by R. Krishnaveni (2008). This section is comprising of 17 items being measured from strongly disagree (1) to strongly agree (5) on a five point Likert scale. The third section has questions on Job Satisfaction (JS) which has 5 items based on Job Description Index of Smith (1969). The fourth section has open ended questions intended to study the importance of PMS as viewed by the employees. The total number of respondents (N = 500) includes Managers (100), Supervisors (100) and Workers (300).

Demographic Details The demographic details of the responding participants are given in Table I (A), (B) & (C). The different aspects of their demographic details of the respondents are self-explanatory. The data in the

tables have been collected from the primary source.

Table I (A) : Demographic Profile of Respondents

Manager Category-wise Distribution Number & % of Samples

Age i. 20 – 30 Years 4 (4%) ii. 30 – 40 Years 23 (23%) iii. 40 – 50 Years 48 (48%) iv. 50 Years & above 25 (25%)

Qualification i. Matriculate 0 (0%) ii. Intermediate 11(11%) iii. Graduate 65 (65%) iv. Postgraduate 24 (24%)

Experience i. 0 - 5 Years 21 (21%) ii. 5 - 10 Years 36 (36%) iii. 10 - 15 Years 32 (32%) iv. 15 Years & above 11 (11%)

Total 100 (100%)

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Table I (B) : Demographic Profile of Respondents

Supervisor Category-wise Distribution Number & % of Samples

Age v. 20 - 30 Years 7 (7%) vi. 30 - 40 Years 16 (16 %) vii. 40 - 50 Years 56 (56 %) viii. 50 Years & above 21 (21%)

Qualification v. Matriculate 14 (14 %) vi. Intermediate 66 (66 %) vii. Graduate 11 (11 %) viii. Postgraduate 9 (9 %)

Experience v. 0 - 5 Years 11 (11%) vi. 5 - 10 Years 23 (23%) vii. 10 - 15 Years 53 (53%) viii. 15 Years & above 13 (11%)

Total 100 (100%)

Table I (C) : Demographic Profile of Respondents

Worker Category-wise Distribution Number & % of Samples

Age ix. 20 - 30 Years 43 (14.33 %) x. 30 - 40 Years 134 (44.66 %) xi. 40 - 50 Years 92 (30.66 %) xii. 50 Years & above 31 (10.33 %)

Qualification ix. Matriculate 38 (12.66 %) x. Intermediate 151 (50.33 %) xi. Graduate 87 (29 %) xii. Postgraduate 24 (8 %)

Experience ix. 0 - 5 Years 29 (9.66 %) x. 5 - 10 Years 138 (46 %) xi. 10 - 15 Years 104 (34.66 %) xii. 15 Years & above 29 (9.66 %)

Total 300 (100%)

Results and Discussion

It was hypothesized that the Performance Management System (PMS) has no association with Job

Satisfaction (JS). In order to ensure the relationship between these two variables viz; PMS as

independent variable and JS as dependent variable, analysis for correlations have been conducted.

The result has been collated and tabulated as given below. (Refer Table 1). The association of different

dimensions of PMS has been reflected in the table.

76 Journal of Contemporary Research in Management n Vol. 11; No. 2 n April - June, 2016

Table II : Correlations between PMS and JS

Sl. No. Performance Management System (PMS) Job Satisfaction (JS) p=

1 Performance Planning (PP) 0.631* 0.000

2 Performance Appraisal (PA) 0.785* 0.001

3 Performance Management (PM) 0.161* 0.015

4 Performance Feedback (PF) 0.282* 0.011

5 Performance Monitoring (PMo) 0.269* 0.006

6 Performance Training (PT) 0.727* 0.003

Overall PMS Score .416 0.000

N= 500, Correlation is significance at the 0.05 level.

In the above table, Job Satisfaction (JS) is the dependent variable and Performance Management

System (PMS) is the independent variable. There are six dimensions of Performance Management

System. It is evident from the correlations coefficient values that all the dimensions have correlations

with Job Satisfaction. The Performance Appraisal has highest correlation (r=.785, p=.001) followed

by Performance Training (r=.727, p=.003), Performance Planning (r=.631, p=.000), Performance

Feedback (r=.282, p=.011), Performance Monitoring (r=.269, p=.006) and Performance Management

(r=.161, p=.015). The overall Performance Management System resulted positive and significant

association with Job Satisfaction having 0.416 value. The significance of the association among

different variables is evident from the respective statistical ‘p’ values.

PMS and its importance

The response of the participants regarding the importance of PMS has been collated and tabulated

below. The views have been tabulated under three categories. The managers, supervisors and workers

have mentioned how the PMS is essential for the organization in different perspectives.

Table III : Category-wise response of employees about importance of PMS

Category Importance for Importance for Importance for Total Employees Organization Employees and

only only Organization

Manager 4 (4 %) 9 (9 %) 87 (87 %) 100 (100 %)

Supervisor 26 (26 %) 33 (33 %) 41 (41 %) 100 (100 %)

Worker 237 (79 %) 24 (8 %) 39 (13 %) 300 (100 %)

Total 267 (53.4 %) 66 (13.2 %) 167 (33.4 %) 500 (100 %)

Source: Primary Source

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The importance of Performance Management System was viewed by the responding participants.

The above table shows that among the managers, more than three-fourth of them viewed the importance

PMS for both employees as well as for organizational development. Very few have stated its importance

either for the exclusive purpose of the employees or for the organization only. In case of supervisors,

two-fifth has favoured the importance of PMS for the development of organization and also for

employees. Among the workers, three-fourth of the respondents stated the essentiality of PMS for

the employees only and little more than one-tenth have indicated the importance for organization and

employee benefit purpose. It clearly shows that there is need of better awareness among the

participants so that they could be in a position to relate their goals with the larger goal of the

organization. The causes of importance stated by the respondents have been tabulated (Table IV).

Table 4 : Employees’ views on importance of PMS

Category of Respondents Causes of Importance of PMS

Managers n Helpful in employee performance appraisal

n Evaluate employee contribution

n Sensitizing employee regarding own task and responsibilities

n Assessing the progress as per schedule

n Designing Training & Development programmes

n Competency Mapping

n Employee transfer

n Promoting employee/s

n Achieving organizational goals

n Managing working teams

n Assigning challenging tasks to employees

n Rewarding employees

Supervisors n Monitoring employees

n Corrective measures for employee’s job activities

n Developing employee behaviour

n Betterment of organization

n Directing employee’s activities at work place.

n Assessing the job behaviour of individual/work team

Workers n Helps in promotion

n Work as per the schedule

n Developing organization

n Understanding individual job responsibilities

n Linking individual contribution to working team/s

Source: Compiled from primary source

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The data in the above table reveals that the managers have indicated more causes for the importance

to PMS than other two categories of respondents. The managers’ felt that PMS helps in appraising

the employee’s performance along with identifying the performance gaps between the expected and

the performance being delivered. Different measurable areas like timely completion of work, job

behaviour, competency mapping, designing training & development (T & D) programmes; and in

framing HR activities like transfer, promotion & employee separation; PMS provides the necessary

inputs. PMS is also vital as it has linkage with employee reward system. The essentiality of PMS is

felt by the supervisors. In monitoring the employees, directing their job activities and in correcting

their works, PMS has a key role to play. The workers’ viewed that PMS is helpful for their promotion

and for timely completion of their assigned work. Some employees also reflected the linkage of

employee’s contribution to team performance. The desired behaviour of the team members are

streamlined by Performance Management System as it sets the goals of the members and the team

along with linking them with greater goal of the organization.

Discussions

The employees should feel that parties involved directly or indirectly with the affairs of an organization

are equally important from the PMS perspective. And such feeling can drive them to precipitate,

proliferate and propagate the organizational success. The employee’s interpretation about PMS of

their company is vital as its analysis provide inputs for strengthening the existing organizational

system. An organization needs not only to measure and manage its current performance but also to

fulfill the expected performance results in future. The vital role of PMS is viewed by the employees.

There is a positive and significant association between PMS and Job Satisfaction. It indicates that

by changing effects of different dimensions can impact Job Satisfaction level of employees. By

strengthening PMS more in terms of better feedback, monitoring, management and motivating

employees to make better involvement in performance management activities would help in achieving

organizational goals in long term. The PMS-JS-P (Performance Management System-Job Satisfaction-

Performance) linkage would strengthen the organization better.

All employees should understand and work as per the expectations of the PMS. It is not the managers,

supervisors or workers alone can achieve the results for the organization. All the categories of the

employees have to work for the development of the organization and thereby their own goals can be

achieved. It is suggested that the top management and HR department should take strategic measures

to develop the employees and bring synergy of their efforts for the greater benefits of the organization.

Implications

The study reveals that employees give importance to Performance Management System from

organization as well as employee perspectives. The impact of PMS on Job Satisfaction (JS) is

expected to have great implications on organization. Future studies can establish this statement

further along with exploring new insights in this light. The characteristics of the PMs have been

featured in different studies. What should be basic features of an effective PMS can be an area of

79Journal of Contemporary Research in Management n Vol. 11; No. 2 n April - June, 2016

future study for the academicians as well as for practitioners. The extent of impact of perception

about PMS of an organization on job performance linking Job Satisfaction can also be an interesting

area of further research. The present study provides some insights for future research which can be

done in the area of policy issues, implementation, facilitating/inhibiting factors of performance, need

and impact of changes in other HR sub-systems on PMS and the allied areas. There is also scope

for research to create SMART (Sincere, Motivated, Adaptable, Result-oriented & Trust-worthy)

employees with the use of PMS in an organization.

Conclusion

The Performance Management System (PMS) is expected to create a positive sense among the

organizational members. The positive and significant association between PMS and Job Satisfaction

(JS) is an interesting finding of this study. There is a scope for developing the perception of employees

in the organization which can be done by communication, encouraging employee participation and

creating importance of PMS for the organization. The importance of PMS in the employees can be

created to attain long-term organizational goals along with the fulfillment of employee’s goals. The

essence of PMS provides the spirit, enthusiasm and interest to work for the employees. The SMART

(Specific, Measureable, Attainable, Realistic & Time bound) goals should be reflected in the features

of PMS of the organization with having scope for change as per the needs of the time in accordance

with the market demands. Developing SMART (Sincere, Motivated, Adaptable, Result-oriented &

Trust-worthy) employees for achieving SMART goals should be the focus of PMS. It is essential for

employees as well as for the organization in the present time and also for future. PMS helps in

evaluating the extent of achievement of employee and organizational goals and their congruence with

strategic goals. And by using PMS, the probable leading and lagging factor can be explored and

effective measures can be taken to improve the organizational performance.

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