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Performance Management


Performance, in the context of organization, is not only a broad concept which has been used interchangeably with efficiency, effectiveness, productivity and more recently competitiveness, it has also been an area of study for researchers from a wide range of disciplinary perspective (Cooke: 2001). The increasing interest in strategic management has emphasised various organisational functions to become more concerned with their role in the strategic management process. Economic, social and technological changes are causing firms to rely more and more on human capital to achieve their objectives. Business objectives are achieved when HR systems, practices, and procedures are developed and executed based on organisational needs, in other words, when strategic perspective to HRM is implemented (Baired & Meshoulam: 1988). In response, the HRM field has transformed to become integrated into the strategic management process through the introduction of a new discipline described as Strategic Human Resource Management (Wright & McMahan: 1992) and extending the HR function well beyond the limits of traditional activities (Miles & Snow: 1984). It has started to investigate the determinants of human resource practices from strategic perspective (Dean & Snell: 1991; Jackson, Schuler & Rivero: 1989). Thus, SHRM is a significant approach which helps in understanding of the management of firm’s human resources (Lundy: 1994). In other words, SHRM is the macro-organisational approach to understanding the overall set of HR policies and firm performance (Baird & Meshoulam: 1988; Wright & McMahan: 1992).

More recently, SHRM literature has devoted a great deal of attention to examining a causal link between human resource strategies and firm performance (Purcell et al: 2005). This theme has led to a growing number of studies concerned with the potential support that good HR policy can make to improve firm performance (Cooke: 2001), so much so that “the impact of human resource management on performance has become the dominant research issue in the field” (Guest: 1997, 263). Becker and Huselid (1998) pointed out that a growing number of empirical studies making it evident that the human resource system is one important aspect that can support organisation become more effective and achieve a competitive advantage. However, many scholars have critically evaluated the extant of research on HRM-Performance links and have contended that the causal effect of human resource management practices on firm’s performance has not yet been established. A larger question remains unanswered due to concerns about theoretical assumptions and methodological limitations (Paauwe & Boselie: 2005; Delery: 1998; Godard, 2004; Guest, 1997; Edwards & Wright: 2001). There is still little understanding of the ‘HRM black box’ (Purcell & Hutchinson: 2007) or the mechanisms through which HRM practices contribute to firm performance (Delery: 1998; Delaney & Huselid: 1996; Bowen & Ostroff: 2004; Paul & Anantharaman: 2003). For example, Delaney and Huselid (1996, p.950) criticise that researchers still do not explore “how HRM practices affect organisational outcomes, whether some practices have stronger effects than others, and whether complemtarities or synergies among such practices can further enhance organisational performance”. This strand of research has been interesting as it recognise the importance of human resources, but it has offered limited insights for organisations determined to achieve competitive advantage through human resources (Delery: 1998).

Based on the research evidence to date, the link between organisational performance and HR practices has been based on the distinction between two normative models known as ‘best fit’ and ‘best practice’ (Boxall & Purcell: 2000; Purcell et al: 2005). Proponents of the best view (Pfeffer: 1994; 1998) argue that a particular set of HR practices are linked with increased performance in all types of organisations irrespective of their context (Marchington & Grugulis: 2000). The best fit approach (Schuler & Jackson: 1987; Miles & Snow: 1984) argues that human resources of an organisation can be a source of competitive advantage, provided the HR policies are integrated with organisational culture and strategic objectives (Boxall & Purcell: 2000). Both these philosophies are built on the premise that the policies for managing people will be executed as intended and have the same influence on all employees who work for the organisation. Many scholars have criticised these approaches because of the differences between the human resource practices and employee’s experience (Paul & Anantharaman: 2003; Purcell et al: 2003, 2005; Wright & Boswell: 2002), because complex organisations have a distinct pool of human capital that may be managed effectively through diverse sets of HR policies (Wright & Boswell: 2002; Guest: 1999; Lepak & Snell, 1999; Marchington & Grugulis: 2000)

Some authors such as Youndt et al, (1996) and Arthur (1994) note the strategic differences between the manufacturing and services sectors, while others attempt to draw a distinction between the attitude and behaviours of manufacturing and service sectors employees. For instance, Batt (2000, p.540) argue that “the relationship between the customer and front-line service provider is a central feature that distinguishes production-level service activities from manufacturing”. It has been contended that the frontline service employee attitude and behaviours significantly influence customer satisfaction and play an important role in firm performance (Schneider & Bowen: 1995). However, Hartline and Ferrell’s (1993, p.61) observe that frontline employees “are underpaid, overworked and highly stressed” (cf. Weatherly & Tansik: 1993). Therefore, the attitude of frontline employees towards the HR policies and practices are important because they have been seen as derivers of discretionary behaviour (Appelbaum et al: 2000; Purcell et al: 2003) and organisational citizenship behaviour (Coyle-Shapiro et al: 2004).

Research on the HRM-Performance link has neglected the role of frontline employees. Recent studies have typically focused to collect data from senior executives or use HR mangers (e.g., Bartram et al: 2007) as single respondents to questions that oversimplify the complexity of competitive positioning and HR strategy (Boxall & Steeneveld: 1999). Therefore, Wright and Boswell (2002) contend that research on HRM-Performance link needs to be employee centred rather than policy focused if the causal association between the policy and performance is to be understood and measured. This research will, therefore, attempt to investigate the HRM-Performance link by collecting data from the frontline employees. The study will examine the impact of HR practices on the attitude of frontline employee performance in retail service organisations.

Literature Review

Performance Management emerged as separate concept during 1980s. Performance management developed from the management by objectives (MBO) approach, first introduced by Peter Drucker (1954). Fowler (1990) argues that both management by objectives and performance management have several identical processes, including the requirement for clear work based goals and developing objectives to be accomplished. In simple expressions, performance management is a process that help employees to perform their responsibilities to the best of their abilities with the objective of accomplishing or exceeding established goals and standards that are directly aligned with the organization’s objectives (McDonnell & Gunnigle: 2009). Performance management is regarded as a strategic management practice that aligns the overall business goals of the organisation through integrating employee’s goal to the overall mission of the organisation (Costello, 1994; Sparrow and Hiltrop, 1994).

Armstrong & Baron (2007: p.2) define performance management as ‘a process which contributes to the effective management of individuals and teams in order to achieve high levels of organisational performance’. Although a universal model for performance management has not been found (Davenport & Gardiner: 2007; Torrington et al: 2008; Armstrong & Baron: 2007) many of the existing models involve a simple four or five step process:

cascading objectives

measuring results against standards

providing performance feedback


reviews to objectives and activities

According to Armstrong (1999), there are four normative concerns of performance management. These are:

to improve performance

develop employees

meet the expectations of stakeholders

Improve communication and employee involvement.

A growing body of research suggests that for performance management to be effective and beneficial it needs to be owned and driven by the front line management (Williams: 2002; Sparrow and Hiltrop: 1994; Torrington et al: 2008). Therefore, the role of capable and committed line manager is critical to successful performance management (Purcell & Hutchinson: 2003; Purcell et al: 2007). Performance management is not merely the appraisal of employee performance (Armstrong & Baron: 2007).

However, evidence is not universally encouraging, and some scholars argue that in its present arrangement performance management can be criticised for being excessively normative (McDonnell & Gunnigle: 2009). This is mainly because of its unitarist ideology. The unitarist ideology ‘may represent one of the threats to performance management as it fails to recognise the plurality of interests that are so much a part of organisational reality’ (Williams: 2002: 252). There is insufficient theory available that supports performance management (Buchner: 2007). Williams (2002) contends that confusion still exists over the nature of performance management. Similarly, the main concern is the lack of integration of activities that some that activities are exploited and while others are not (Bevan & Thompson: 1992). The main issue is that some organisations do not understand whether their HR practices are actually aligned or pulling in discrete direction (Torrington et al: 2008).

Research Objectives

How performance management system is positioned within the organisation and what is its key purpose. How well performance management systems are integrated with SHRM and broad organisational goals and objectives?

To what extent the organisation’s existing HR practices influence employee commitment to engage in discretionary efforts, which, in turn, is reflected in their performance?

The barriers that might prevent the performance management process from having the desired impact on the frontline employees.

How frontline employees perceive and interpret HR practices and how these practices manage employee attitudes and behaviours (employee experiences, responses and various outcomes)?

Whether the current performance management system helps the line managers to engage and develop more positive relationships with the people they manage. Do line managers have the skills to carry out their performance management duties effectively?

Can supportive line managers raise performance regardless of the performance management process?

Research Methodology

Research Design

The methodology to be used in conducting this research will involve use of quantitative and qualitative research methods. Adopting a combination approach make it possible to generate thick data and can be advantageous as this can help provide ‘more perspective on the phenomena being investigated (Easterby, Thrope, & Lowe 2002, 41). Combination methods also make it possible to check for generalisation and to increase the validity of our studies (Teddlie & Tashakkori: 2003). The data will be collected using survey questionnaire and semi-structured interviews. These approaches will enable the researcher to obtain all the relevant information that is required for this research.

Stage One

Stage one involves issuing questionnaires to a range of frontline employees working in retail service organisations. Questionnaires will be distributed and collected by hand to each outlet by the researcher and left with the line managers to issue to frontline employees in various job roles. Although, Bryman and Bell (2003) argue that convenience sampling has its limitations in terms of generalising the findings. However, the use of convenience sampling means research questionnaire can be collected by the researcher in a relatively short time (Foster, Whysall & Harris: 2008). The statistical software package SPSS will be used in this research to analyse the frontline employees responses.

Stage Two

Stage two intends to employ convenience sampling and involves interviewing frontline employees and line mangers. Interviewees will be randomly selected on the basis of their job role. The interviewees will be asked similar questions to those posed in the questionnaire. However, the issues will be explored in much more detail. The researcher will obtain prior consent from the participants that the interviews will be audio taped and transcribed. This information will cover the ethical issues of confidentiality. The interviews will be analysed manually according to themes that emerge from the materials, interview questions and literature review.

Research Limitations

This study, like most research, is not without limitations. It may not be possible to generalise the research findings. Further, there will be financial and travel constraints and there might be limited scope for the respondent to reply questions in detail which will aid this study.

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