Introduction Historical Background Of Performance Management Business Essay

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Performance management is not a new concept, despite the fact that it has become more popular in the last two decades. D.Gresty (2010:15) on his work on performance management states that "performance management has been much researched and discussed since the early 1990's".

According to a research by ACCA global, performance management can be traced back to the 1940's where the process was developed by managers to justify whether the salary that was being paid to the individual was justified.

PERFORMANCE

In order to understand performance management well, we need to understand the meaning of 'performance' well before. According to Bates and Holton (1995), "performance is a multi-dimensional construct, the measurement of which varies depending on a variety of factors".

Performance is the accomplishment of a given task measured against preset known standards of accuracy, completeness, costs and speed. In a contract, performance is deemed to be the fulfillment of an obligation, I a manner that releases the performer from all liabilities under the contract.

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Besides, The Oxford dictionary defines performance as "the accomplishment, execution, carrying out, and working out of anything ordered or undertaken".

PERFORMANCE MANAGEMENT

There have been many literatures in the last decade about performance management. Elaine D. Pulakos (2009:3) defines performance management "as the "Achilles' Heels" of human capital management, and it is the most difficult Human Resource system to implement in organizations." In his book on performance management, Armstrong (2009:55) defines performance management as "a process for establishing shared understanding about what is to be achieved, and an approach to managing and developing people that improves individual, team and organizational performance."

For this purpose, performance management can be defined as an important tool for an organization to achieve organizational success. Performance management will enable organizations to review

The purpose of performance management is to transform the raw potential of human resource into performance by removing intermediate barriers as well as motivating and rejuvenating the human resource.

(Kandula, 2006)

"Performance management is creating a shared vision of the purpose and aims of the organization, helping each individual employee to understand and recognize their part in contributing to them and hereby managing and enhancing the performance of both individuals and organization."

(Fletcher, 1997:36)

Performance management is a continuous process of identifying, measuring and developing performance in organizations by linking each individual's performance and objectives to the organization overall mission and goals. Performance management is a system by which an organization evaluates and develops its worker's skills, behaviors and individual performance in order to improve the organizational performance.

PURPOSE OF PERFORMANCE MANAGEMENT

"Performance management is a means of getting better results from the organization, teams and individuals by understanding and managing performance within an agreed framework of planned goals, standards and competence requirements. It is a process for establishing shared understanding about what is to be achieved, and an approach to managing and developing people in a way that increases probability that it will be achieved in the short and long term. It is driven and owned by line managers."

(Armstrong, 2001)

Performance management is a good tool to prevent problems from occurring during the year. Most people think performance management involves looking backwards, because they focus on the appraisal, but in fact, goal setting, and communication about performance all year long, helps to identify barriers to performance before they impact on performance. The result is better productivity, and less "fire-fighting" or dealing with performance problems after the fact.

PERFORMANCE MANAGEMENT AND PERFORMANCE APPRAISAL

The first difference between performance management and performance appraisal is definition. Performance management is a set of activities and evaluations that ensure the company is being effective and efficient in the process of meeting its goals. It analyzes and concentrates on various elements inside the company structure, such as the overall performance of the company, the performance of a specific department, phases of producing a product or service and employee performance. Performance appraisal is the specific analysis of the performance of employees inside the company. It evaluates the employee's work and quality for the year. Performance appraisal can be considered one step in the greater effort of performance management--a step that focuses on the employee's past performance--while performance management is an ongoing process that evaluates day to day performances.

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The table below shows some of the differences between performance appraisal and performance management.

Performance appraisal

Performance management

Focus is on top down assessment

Stresses on mutual objective setting through a process of joint dialogue

Performed annually

Continuous reviews are performed

Usage of ratings is very common

Usage of ratings is less common

Focus is on traits

Focus is on quantifiable objectives, values and behaviors

Monolithic system

Flexible system

Are very much linked with pay

Is not directly linked with pay

Source: Armstrong (2009) cited by, management study guide

According to standard chartered bank, performance management is concerned with those processes and behaviors by way of which the managers manage the performance of the employees for developing high achieving organizations.

According to Eli Lilly and Co. performance management focuses on aligning the individual goals with the goals of the organization and ensures that the employees work on the right tasks and do the right things.

PERFORMANCE MANAGEMENT PROCESS

The process of performance management was defined by Latham, Sulsky and Macdonald in 2007 cited by Armstrong in 2009 consists of four steps. They are as follows:

Desired job performance is defined.

Specific challenging goals are set as to what the person or team should start doing, stop doing or do differently.

The individual's performance on the job is observed.

Feedback is provided and a decision is made about training, transferring, promoting, demoting or terminating the contract of an individual.

Dr. Christopher Mabey, Dr. Graeme Salaman and John Storey (1998) designed a schematic model of performance management. They said that "there is no single, universally accepted model of performance management in use". This can be true as each organization has its culture and its manner to improve the performance of individuals and thus the organizational performance. Each organization has its situation and performance management systems will differ from organization to organizations. They stresses that, the model can be expressed as a 'performance management cycle' consisting of five elements.

Setting performance objectives

Measuring outcomes

Feedback of results

Rewards linked to outcomes

Amendments to objectives and activities

These two models of performance management system are practically the same, but Armstrong did not mention the 'reward' element in his model very clearly, which is very important. This reward can have a positive motivational effect on employees. This can boost up performance of workers, thus organizational performance.

FEEDBACK

According to a research by Dartmouth (2008), feedback is among the most valuable things that you and your partner can provide one another. According to their research, feedback can do many things. Such as:

Honor competence and reinforce behaviors you are looking for

Help align expectations and priorities

Fill gaps in knowledge

Let people know where to take corrective actions

Alleviate fear of the unknown.

Feedback is a method of communication with another person. In accordance with the research of Dartmouth (2008), the aim of feedback in performance management is normally to:

Improve work performance

Maintenance of performance

Change behavior

To make another person aware of one's behavior upon others.

Feedback is very important for a performance management system. Feedback is the information that about performance that leads to change or maintain performance.

360 DEGREE-FEEDBACK

APPROACHES TO PERFORMANCE MANAGEMENT