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The purpose of this report is to recommend the company develop a performance management system/capability to meet new market requirements and for growth, higher incomes, productivity and for greater competitiveness as well as provide recommendation. This report has considered the organizational challenges to encounter.
This paper summarizes the process that will be followed in planning, execution, measures approach, evaluation and review in performance management. The proposed system reflects the need for more responsive organizational styles, better workforce planning, determine priorities and allocate human resources (Aguinis, 2009). Performance management can influence employees' attitudes toward their work. An effective performance management framework can help reduce costs as well as maximize efficiency, which increases its capability to compete in a global market. Many organizations have had a re-think the manner they traditionally function, from the techniques in which they carry out and promote their businesses, to the means in which they compensate employees in order to improve their income, sustainability and gain competitive edge.
This report is to suggest effective method and prerequisites that will be able to help the company manage challenges in implementing the system and imperatives for driving growth, attain high performance and better competitiveness.
This report seeks to determine the importance of effective performance management system to the organization growth, differentiate the relationship between the organization growth and performance management and the incorporation of HR practices.
The report is entirely focused on effective performance management as a management tool. This means can enhance the chances to succeed, but not guarantee it.
The study will be explanatory as this paper is set to present facts related to the view and nature of a situation. The information made use of in this report was gathered from Secondary data search out from related literatures.
A good performance management effects, directly or not directly, will enhance the financial performance of the company, for more accountability, be more agile and to acquire key capabilities (Cole, 2010). However, these eventual effects may possibly be visible within a few years or could take a longer period of time, least impact on performance. An enhancement in working efficiencies, greater employees' satisfaction, less turnovers, align goal and rewards/pay for performance, improved communications, knowledge management and standardization as well as improve existing processes in the company can be the effects of a performance management system.
MTEL has been trounced by management set-back, fusion of bureaucracy, corruption, ineffective strategies and poor business decisions. MITEL is one of the leading telecom companies in Nigeria. Since the deregulation of telecommunication sector, the company has witnessed a turn down in growth and performance organization-wide, which have led to entire failure of the systems. The operational state is poor and employees are being owed many months' salaries and huge outstanding burdens that are increasing since little or no income is being made to resolve them. The company is at risk due to poor performance and not being competitive in the labour market pay and benefits. If a management is fault or misfit, a business strategy will not deliver satisfactorily however well conceived this may be. A company's general performance depends significantly on its management processes to position it in the marketplace. Success is not as a result of its products but by its management.
The criterions used to assess the possible organization-wide performance are as follows.
Reaching customer and stakeholder expectations.
Responsive and flexibility to environmental requirements.
Appropriate procedural resources.
Human assets and Management
The envisioned performance management framework
Based upon investigation of all of the data gathered from the evaluation of MTEL, I propose that the executive team consider adopting the balanced scorecard (BSC) approach. BSC is an excellent means for honing a particular strategy, communicating it to the company, aligning employees around the strategy, and establishing the strategy into day to day decision-making. It helps to improve in-house and external communications and in monitoring performance against strategic objectives. The ability that managers have to exercise power within the company derives mainly from management at the strategic level. Success of the system requires clear understanding and benefits of the system. The successful implementation of the performance management framework requires organization-wide support and acceptance. The recommended Plan of Actions is in 3 stages, they are as follow;
Prerequisites: There are 2 important prerequisites before a system is implemented (Aguinis, 2009). First, good understanding of the company's mission and business plan goals. Secondly, understanding of a specific job. The established goals will now be translated into company goals to departmental goals, to individual goals by this, it help in creating individual performance plans for every employees and teams. Job analysis of a particular job has to be done to determine the key components of a job situation. Doing this, the system will be aligned with the individual employees' role and nature of their job.
Preparation: This entails communication, appeal procedure, training and testing. Prior to the system implementation, a communication plan have to be set up and disseminated to all employees have better know about the system and its benefits as well as communicate details in the appeal process. When an appeal procedure is place, employees can question evaluation and managerial issues. The next step is training of evaluators on various training programs on ratings errors. Before the system is lunched formally, the system needs to be test run for corrections and revisions of any fault that would prevent the successful implementation.
On-going monitoring and evaluation: When the system has been finally implemented, it is very important to monitor and evaluate the system (Aguinis, 2009) on its effectiveness and extent of intended results on a regular basis. Without carefully collected data, nobody would ever know. The purpose of evaluating a system is to document it effectiveness on people in the organization. Data collected must include reactions to the system and reviews of the system's operational and technical prerequisites (Aguinis, 2009). System evaluation is done through survey, performance ratings overtime and interview of all stakeholders and all staff. other additional gauges includes number of employees evaluated, system satisfaction, distribution of ratings to find out any ratings errors, organizational and unit level performance, general cost/benefit ratio of the system, quality of appraisal meeting and quality of information provided (Aguinis, 2009).
Following is a brief investigation and description of the challenges to overcome and problems to be resolved, and ideas to be included in the Plan.
Problems and Challenges in Performance management
Organizations come across different problems and challenges in Performance management in order to make the system effective and successful. The main Performance management challenges are mostly in the evaluation process. They are:
Unclear standards - If performance standards are not made clear, there are tendencies for fabrication of information about the performance of an employee. For the use of evaluation, the criteria chosen should be in measurable or quantifiable terms.
Create a rating tool- The purpose of the evaluation process is to assess the employees' performance rather than the employee. The focus of the system should be on employees' development in the organization.
Rating errors and evaluation - Many performance management schemes are overwhelmed evaluator errors. Evaluators are likely to make errors knowingly or knowingly and errors originate from personal bias like stereotype, leniency error, halo effect, similar to me (tendency to evaluate others more positively when they are similar to us.) etc. may creep in the appraisal process. Therefore the rater should exercise objectivity and fairness in evaluating and rating the performance of the employees.
Lack of competence - Management team should choose raters or evaluators cautiously. Raters/evaluators should have the necessary skill and the knowledge to decide on measure accurately. They have to have the experience and the necessary training e.g. rater error training (RET) to carry out the evaluation process objectively. Aguinis(2009) states that raters training make them more aware of possible errors on can make, help improve accuracy for better assessment and improve observing skills as well as improve their confidence to manage performance.
Resistance-The evaluation process may be faced with resistance from the employees for the fear of negative feedbacks and ratings. Thus, the employees have to be communicated and clearly state the purpose of the evaluation process. The standards should be communicated clearly and individual employees should be made aware of what precisely is expected from them.
Feedbacks -Managers are uncomfortable giving negative feedback and this translates into avoidance and apprehension of appraisal meeting. Negative feedback is avoided, deferred, sugar-coated or not honest during the appraisal discussion. This due to managers feeling that they will be responsible for an individual not getting a pay increase or reward. However, this can be mitigated by training managers or supervisors responsible for providing feedback (Aguini, 2009).
Performance Determinants and measures approaches
What factors grounds an individual performance a certain level? First, a combination of declarative knowledge, procedural knowledge and motivation (Aguinis, 2009) allows individual to perform at a high-level. Secondly, the system in which the job is performed. They are management activities, HR practices, work environment, and factors beyond the individual control. There are three (3) approaches one can use to measure performance, namely, trait-based, behaviour-based and result-based. Trait-based lay emphasis assessments only on the level in which individual possess certain required personal characteristics considered important for specific job e.g. cognitive and physical skills. Behaviour-based lay emphasis only on behaviour-oriented procedures effort to determine what individual actually does on a particular job. Result-based is an outcome-oriented method, it lay emphasis only on outcomes and results of employees contribution e.g. number of mistakes, sales etc. However, research shows that adopting behaviour-based and result-based approaches is excellent to assess performance which many high performing organization are embracing for example, Victoria Secrets, Bath & Body Works and Express (Aguinis, 2009).
Strategic importance of an effective performance management to organizational growth
A Performance Management System is crucial to the success of any organization as it influences the efforts applied by employees, which in line drives base-line business results. In addition, Performance Management System helps in identifying, recruiting, motivating, and retaining key employees
Integrated performance management framework
Attainment of the requirements an effective performance management system must be backed by implementation of a system that incorporates management, business and individual plan and performance, together with:
Planning and expounding performance goals and aligning individual and business strategies with organizational priorities.
On-going feedback on performance and assessment of individual and team performance against the accomplishment of objectives.
Recognition and rewards for performance.
Counseling and effectual management of poor performance
Education and development to increase individual and organizational capability.
Evaluating the input of individual and organizational performance.
Tie individual's knowledge, skills, and abilities (KSAs) with the company's human assets needs and business plan objectives.
Provide managers and workforce with the tools needed to focus on short and long term goals that adds equally to job and management success.
Maintain the organization in developing and supporting a culture that recognizes and rewards each employee contributions and group performance.
Encourage a work atmosphere that makes employees to keep on flexibly focused. For example, an employee can handle existing tasks and unit's goals while maintain pace with, and adjusting to, change in the working environment.
Performance management is regard as the effective utilization of interrelated strategies and actions on a regular basis to improve the performance of organizations, teams and individuals. Performance management framework must incorporate and link management, business and individual plan and performance for it to be effective. It must also provider a mode of recognizing and rewarding superior performance and to manage underperforming employees.
The contingent pay (CP) also known as pay for performance (Aguinis, 2009) are rewards to individuals based on the level of performance on a job. Organizations are currently in quest to sustain competitive advantage through pay increases as a way of attracting boost labour expenditure, while simultaneously reward and motivate the employees. CP plans serve as an excellent tool for companies to recruit and retain high performer if they want to win the talent war (Aguinis, 2009). Cp plan selection is dependant of the congruent factor a company is seeking for. The table below summarizes the criteria for selection.
Business plan objectives
Contingent pay plan
Skilled based pay
Collaboration/ integration (teamwork)
Team Sales commission
Profit sharing/stock sharing
Although a particular CP plan selection will differ between company and industry, corporate culture, management style and strategic priorities but the focal outcome is the same, superior base-line results. There are variety of approaches to CP pay is available, either paid together or partly on job performance, generally based on:
Performance-linked pay added to base salary for satisfactory or higher performance, usually in terms of either incremental progression through pay points or through a percentage increase, thereof
A one-off bonus performance-linked pay (Variable pay) in recognition of higher than satisfactory performance.
Pay increases have turn out to be a benefit that workers strive for, rather than a salary that was traditionally expected. With contingent pay plan, employees accept more responsibility for end-results, as well as have a clear understanding of the organizational objectives. To design an effective contingent pay model, management need to ensure that assessment about employees' eligibility for rewards are fair and objective, based on an evaluation of individuals' job performance and made in accordance with the organization values and without discrimination, inequity, patronage or favoritism.
Human Resources Practices
The basis of the "best fit" (Tsai Et al, 2008) system is that HR strategy is mainly effective when it is properly integrated within a particular organizational and environmental framework. Performance evaluation has expanded as concept and as a method of practices and in the form of PM which has become element of more strategic method to integrating human resources activities and business strategies
What is the function of HR managers in performance management? To create performance management system that is fitting with quality principles. For evaluation, HR manager gives employees development opportunities, support programs and rewards strategies. HR personnel contribute to the development and achievement of company strategic business objectives. HR department is vital to overall output and competence of the employees in any successful business. In most organizations, the function of the HR department is not marginal or concealed to other departments. Indeed, an excellent human resources can be one of the most respected and appreciated departments in an organization; HR manager job is people, and people are organization's most necessary asset. HRM activities are to support the performance management process. These include:
Well designed jobs and written job descriptions
Complete employee orientation and training
A positive and supportive working environment
HR personnel assist effective performance management practices by helping to define success, establish set-up measures, provide feedback, and reward high performance. They provide guidance and advice to management on performance issues and problem resolution. They play a significant role in making sure that all employees feel supported and they have access to training, development, and other opportunities to take career and skills to the highest level. HR manager is responsible for sustaining the strategic organization of a company and leads the delivery of human resources programs, services, and initiatives.
From the evidence offered and the data gathered, I discovered that the company management is faulty might not be capable to deliver sufficiently on its strategy (Child 2005). It also revealed that there is fall in patronage and market share decline, resulting to income loss. The company is not in alignment with priorities thus, it's not capable in supporting internal or external expectations. Some crucial functions are not meeting the organizational needs. Workers are less skilled and under-trained. Therefore, the successfully implementation of a performance management system will promote an environment for the company that encourages workers and managers to effectively learn, develop individual, communicate, reward good performance and hold people accountable for success.
Here are listings to consider. This is focused on becoming more efficient through costs decrease, working to increase effectiveness, and enhance capabilities out to stakeholders.
Feedback system. To create a flexible operational management and to succeed in a dynamic marketplace, managers will need to develop sensitive antennae to important information pertaining to changes and use it to support processes and decision-making in the short and long term. Again, engage employees in an ongoing performance feedback. Give positive, constructive feedback when needed. Regular feedback is essential to ensuring that workforce knows what they done correctly and what needs development and improvement. Feedback must be specific, timely and meaningful. Feedbacks make clear of expectations needed from the employees, standards, and supposed performance, and transmit the hitches that might contribute to or intrude on employee from achieving set goals. It prompts self-assessments and self-awareness by making managers and employees reflect on previous performances.
Improving outputs. Knowledgeable employees promote the success a company. Management should facilitate the employees job performance by providing access to important information; environment that encourages learning and knowledge transfer.
Clear communication. Communicate lucid performance expectations and standards. If an individual do not understand what is expected, it is hard or impossible for him/her to achieve those expectations. Mangers should not wait until the annual review to inform employees about their goals supposed to be. Furthermore, encourage two-way and open communication in order to motivate and boost confidence of employees.
These areas of effort embrace very big potential for helping any company to build the kind of agility in business to survive the market uncertainties.