Performance management is one of the tools human resource managers can employ to engage employees and teams to achieve their goals and motivate them to achieve high levels of organizational performance. Nowadays, HR managers are faced with a variety of competition and business environments that are constantly changing individuals' values and lifestyles. Hence, the HR mangers need to understand the processes that can help employees achieve the goals set by their organizations.
The purpose of this report is to evaluate human resource management, in particular, performance management by focusing on three general purposes namely, strategic, development, and administrative. Arguments are made outlining the advantages and disadvantages of implementing performance management systems. Furthermore, sources of performance information used to evaluate the sales assistance of ANZ Bank are examined. Finally, an evaluation of the fairness of performance management is provided. Relevant literatures will be reviewed and discussed to support the ideas presented within this document.
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This report discusses, evaluates and in some cases, criticizes existing researches dealing with performance management and also shows the relationship between different researches toward performance management, including the advantages and disadvantages of implementing this system. Also, evaluations of the performance information that can adequately measure the performance of ANZ's sales assistance along with the fairness of performance management systems are provided.
The General Purposes of Performance Management
Commonly, the purpose of Performance Management is to achieve an organization's goals or objectives. For instance, Walters (1995) states performance management is the process of improving the quality and quantity of work finished and aligning all the activities involved with an organization's objectives. Similarly, Armstrong (1998) recommenced performance management as the strategic and integrated approaches to deliver the successful to organization by improve the performance of employees by developing the capabilities of teams and individual contributors. Moreover, William (2002) states that performance management targets individuals within an organization and aims to direct and improve their performance and ultimately enhancing the organization's objectives. Schuler, Fulkerson and Dowling (1991) claimed that Performance management is an essential business driver to help businesses achieved desired results. Generally, Performance Management is an ongoing process that needs to be monitored throughout the year. The Performance Management purposes, which mainly includes areas such as, strategic, developmental, and administrative. Thus, the overall expectations and performance objectives are reviewed as following:
2.1 Strategic Purposes:
Armstrong (1999) pointed out that the important features of PM are goal setting and feedback coupled with the development of individual characteristics as well as the development of organization's strategies.
Utilizing the ideas presented within several literature reviews, the major roles of Strategic Performance Management can be classified as follows: (i.e. Atkinson, 1998; Dumond, 1994; Sink, 1991; Martinsons et al, 1999; and Neely, 1998)
Overlooking the process of strategy implementation by assessing if the strategy is being put into practice as planned. Managers and higher-level personnel issue objectives and goals and not only ensure that these strategies are implemented but also that the contents of the strategy are up to date.
The position check and selection employees by looking at whether the result of performance expectation is achieved
University of California, Berkeley introduced the communication process that includes clarifying expectations, setting objectives, identifying goals, providing feedback, and evaluating results. Consequently, to help employees understand and meet the company goal provided the clearly of direct communication by pass the information to employees about the expectation of individual to be achieved, and also provides the feedback including benchmark's performance in difference department, teams, individual by report as the whole regarding their performance with respect to expected goal have been consider.
Documentation process that enable line manager and employees to see the performance management as a part of daily workplace behavior.
2.2 Development Purposes:
Performance management is an ongoing process. After a set of work objectives and organizational goals are agreed upon, the HR start with a clear agreement based on the strategy, goal, measure, and performance goal to be implemented. Organization coaching and developing process by evaluation of employees' attention to these strategies and point out employee's strength and weakness when the employees not perform well as they should. Therefore, the performance management seeks to improve these employees performance. Moreover, organization has to ensure the employees achieved the measurement results through the feedback so employees know where they stand. De Cieri et al. 2008 suggested that to build a performance culture by establish the process to encourage performance management feedback each day rather than the process that occurs throughout the year. As the result, the reviewed of performance annually more likely distorted and forgotten in order that organization should progress monitor regular and provide employee feedback after each particular event finished. At the end of performance period, assessment is made against objectives, means or behaviours demonstrated. Plus, new objectives for the next performance period maybe established (The University of California, Berkeley).
Always on Time
Marked to Standard
Furthermore, Kaplan and Norton (2001) argued that employees at level need to learn the principles of the system, its measures, tools and procedures. Thus, the organization encourage improvement and learning by provided valuable information to help identify individual training need to improved employee performance and build up the potential of employee for further advancement. Moreover, Performance management system focuses on the skills that are required to perform a particular job and training will help employees to achieve that skill employee will get training that are required and have better positions and compensation offers within the organization.
2.3 Administrative Purposes:
De Cieri et al. 2008 described the studied of PM can help the organization in particular to administrative decision making such as salary, promotion, retention, and termination and recognition of individual performance. The organization can define employee salary toward their performance, the person who greater performance will get the greater salary. The successful of performance management process (well-conceived and well-implemented) can motivate employee through financial with the compensation and also can motivate by non-financial reward such as positive feedback and opportunities to development (Armstrong, 1999). Thus, the reward can motivate employee via their efforts that rewards can be financial and non-financial by basically rewards provide base on the organization ability to pay and legal regulation as the company take the action by use the performance measure to calculate the rewards.
As the result, it can say the reward can motivate and encourage building short term and long term incentives of engage performance. As the result, compensation can motivate the person to perform well by the good compensation package will increase the employees productivity and satisfaction level of the employees. In additional, some organizations award the salary and bonus base on their performance.
Armstrong and Baron (1998) demonstrate that performance can be affected by several of factors, all of that should be taken into account when managing, measuring and rewarding performance.
3.0 Arguments For and Against the Implementation of Performance Management
A key aspect of performance management is training and developing new techniques that can help organizations improve individual, team and organizational performance. For example, ANZ develop their employees to be successful in their roles, by hosting training programs in a wide range of areas such as developing inspiring leadership qualities, providing learning and development opportunities and by developing and retaining talented employees who want to undertake challenging assignments. As a result of all these programs, trained sales assistance units are able to market new products online to increase customer convenience and satisfaction (Corporate Responsibility Review, 2008). As online functionality improves with time and effort, customers are provided with concise and timely information such as interest rates, currency exchange rates and so on, resulting in an increased number of customers utilizing these services and higher s productivities.
Produce Meaningful Measurement of Employee Performance
Performance management can help ensure that employees receive a fair appraisal based on their performance, by using various methods to evaluate employees. Organizations then inform employees of the results, in the form of constructive feedbacks. Organizations also take efforts to improve aspects of employees' productivity by providing clear information of what is expected of them and align these expectations with the overall company goals and targets and also by hosting quality training and development programs. Consequence, the measurements are useful for organization setting standards for comparison with similar organizations or previous years (Hyndman and Anderson, 1997)
Increased Retention Rate
Performance management systems are implemented not only to evaluate employee performance but also to understand the basic needs of employees. It helps senior mangers to understand what employees are looking for, in terms of job satisfaction or how he/she is performing in their respective jobs. It helps to increases retention rates in organizations. Employees are aware of what is required of them and focus their output according to these specifics. For instance, ANZ's business strategy of recruiting and retaining employees has resulted in an increase in the number of employees from 8,810 to 9,245 between 2008 and 2009 (ANZ, 2010).
Performance management also can help ensure that employees receive equitable treatment because performance management appraisals are based on results. Analysing these results can lead to enhanced job satisfaction, increased productivities and so on. Additionally, performance management can facilitate ongoing, constructive communication between supervisors and employees, all the while focusing on achieving organizational goals and targets.
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Armstrong and Baron (2003) also suggest that the successful implementation of performance management systems can result in desirable culture changes and avoid problems such as, lack of understanding and enthusiasm.
Recently, organizations have been forced to cut down cost due to the global economic crisis. The decision of whether or not to train employees has been a consequence of this phenomenon. Even though training is the best way to retain and maintain employees, the effects of economic recession have led to organizations cutting down on training programs. During periods of economic recession, organizations are faced with a higher than normal rate in employee turnover. (Glance, Hogg and Huberman, 1997).
Performance management frameworks and systems do not directly take into consideration external factors such as, global recessions or natural calamities. As such, when such a scenario does arise, performance management system may have to undergo heavy modifications to compensate.
Unrealistic Performance Targets
Sometimes organizations are desperate to achieve organizational goals and as a result, unrealistic performance levels may be set for employees. These targets are often difficult and unattainable, and as a result, dissatisfied employees may decide to leave their jobs.
Actual Performance versus Target Performance
Failing to effectively implement performance management systems may give rise to a lapse between actual and target performances. A manager's inability to conform to procedures such as conducting regular meetings to discuss employees' performance and providing them with necessary training may lead to a breakdown in the entire system. Therefore, an employee's lack of understanding of what is precisely required of them can greatly impact an organization's performance as a whole.
4.0 An Evaluation of the Performance of ANZ's Sales Assistance
Like any successful organization, ANZ bank takes its corporate responsibilities very seriously by adopting responsible business practices and by reporting and updating their Corporate Responsibility (CR) Performance. ANZ's CR Reporting follows the guidelines set by the global best practice standards.
In 2008, ANZ Bank implemented a new, streamlined approach, known as the Global Performance Management Framework, to facilitate enhanced monitoring of their employees' performance and to utilize their personnel's full potential. As such, the simplified and globally homogenous approach they adopted utilizes a concept known as 'balanced scorecard', which measures and evaluates the performances of their employees across four main company objectives, namely, Financial, Customer, People and Process, and also the benchmarks of behaviour and risk/compliance that are exhibited throughout the year.
The Performance Management at ANZ is divided into three stages: Performance Planning, Performance Coaching and Performance Assessment.
Performance Planning: This stage involves setting clear and measurable objectives and targets at lower levels of the organization. Strong emphasis is placed on the impact that achieving these goals have on the organization's broader business goals and priorities. Employees and managers are unified under a common set of highly ambitious, yet realistic and achievable goals from the beginning so that each individual understands the importance of his/her role and how he/she can contribute to the overall success of the organization. One of the key focuses of this stage is ensuring that employees have a clear understanding of the behaviour and risk/compliance standards expected of them.
Performance Coaching: At this stage of Performance Management, managers conduct regular meetings with employees to coach and develop them. Managers are required to evaluate employees' performance and appraise their current status in respect to the performance levels expected of them by conducting mid-year performance discussions. A key aspect of this stage is to ensure that managers provide employees with sufficient support and learning opportunities that can enable them to succeed at their roles.
Performance Assessment: At this stage, higher level personnel provide lower level employees with an evaluation of their performance at the end of the year. The outcomes of this stage are linked directly with the company's remuneration and rewards schemes. (Corporate responsibility review, 2008)
Following these guidelines, the Performance Management Framework provides each individual within the organization with a clearly defined set of objectives and goals and ensures that they understand precisely what is expected of them. Sales assistance involves handling routine client enquiries in all segments of the company's objectives. Therefore, the tools and instruments employed in maintaining the organization's new Performance Management Framework, can effectively evaluate the performance of sales assistance in ANZ Bank, especially when coupled with detailed and informative annual CR Reports.
In addition to providing annual performance reports, ANZ also maintains a Corporate Responsibility website and issues annual CR Interim reports and monthly Corporate Responsibility updates to stakeholders. The information contained within all these reports and updates can adequately evaluate the performance of personnel, and more importantly, provide detailed information on specific branches of the company's departments, like sales assistance.
ANZ has been reporting on its CR Performance since 2004. Each year, the organization's goals and work programs include high-priority issues involving their industry, customers, employees and the community.
According to the 2008 CR Report, by September 2008, ANZ had witnessed the first rise in customer satisfaction statistics in over six months. The organization had set six customer-oriented goals:
Implement a new Personal Division policy and processes to assist retail customers facing financial difficulty
Maintain their position as the number 1 Lead Bank for major Corporate and Institutional clients
Achieve Equator Principles reporting for 100% of ANZ's Project Finance transactions
Continue to improve their retail customer satisfaction and match the performance of community and regional banks
Meet or exceed the performance standards set out in their Customer Charter and conduct a review of its commitments
Implement Institutional social and environmental lending policies for forests, mining, energy and water.
The first three goals in the above list were successfully achieved, while the latter three goals were partially satisfied.
There were five employee-oriented goals set by the organization for the year 2008, and only one of these goals - placing women in managerial positions in Australia and New Zealand - was unattained, although, the actual statistics only marginally trailed the target figures. The goal of employing 100 Indigenous Australians, as part of the Indigenous Employment Strategy was successfully accomplished, as 106 Indigenous trainees were employed by ANZ in 2008. The three other set goals that were partially achieved are: Closing the gap on pay differential between men and women at all levels of the organization, Reducing their Lost Time Injury Frequency Rate by a further 20% in Australia and New Zealand and report performance globally, and improve their performance in the ANZ Engagement and Culture Census.
Of the four community-oriented goals that were set, all four were successfully accomplished. The goals included: Release ANZ's bi-annual financial literacy research, Meet their financial literacy and inclusion program targets, Achieve 70,000 hours of staff volunteering across the Groups and 15% participation in payroll giving, Achieve the commitments in our Reconciliation Action Plan including staff training, financial literacy and assisting to build the capacity of Indigenous organizations.
The figures and outcomes in these reports provide adequate information towards evaluating the performance of various branches in various departments.
5.0 Evaluation of the fairness of performance management
One of the most important functions of human resource management is Staff Performance Management. As discussed earlier, ANZ Bank employs a management tool known as the Global Performance Management Framework to monitor, evaluate and enhance the performance of its employees. One of the key aspects of Performance Management is to formulate a set of goals and priorities that serve as targets and guidelines for employees to better understand their respective roles and how each individual's performance impacts the organization as a whole.
The employee performance management system encompasses the following basic aims:
Direct employees in order to achieve the objectives in the various departments and branches present within an organization.
Appraise, evaluate and monitor the performance of employees and enhance communication between employees and management personnel.
To provide pathways and formulate schemes for developing employees.
Throughout this report, various research materials are sited supporting the fact that performance management, if implemented properly, can ensure an organization's success. This section of the report attempts to link performance management with other Human Resource Management functions to ascertain and evaluate the fairness of performance management.
Figure 1: The link between Performance Management and other HR Functions
For a performance management system to be effective and functional, certain elements are normally incorporated into the system:
Open and fair
Oriented towards the competency of employees
An ongoing process (HRM civil service bureau, 1999)
Open and Fair
This element of the performance management system seeks to achieve fairness in performance appraisal by encouraging employees to be outspoken and constructive in their feedbacks. Additionally, managers are also encouraged to be open and objective in their appraisals of the employees. The following methods can be instrumental in accomplishing this:
Formulating comprehensive and detailed objectives and targets.
Encouraging higher-level employees to conduct discussions with employees pertaining to their performances and providing counselling and training when necessary.
Making equal opportunities available to all staff members, in terms of promotions, remuneration and rewards packages and training and development.
Forming a panel, whenever possible, to facilitate fairness in performance appraisals.
Oriented Towards the Competency of Employees
The competency of employees can be broadly classified into two sub-categories; core competencies and functional competencies. Competency relates to the knowledge, attributes, attitude and skills that are required for an employee to succeed in his/her role. Core competencies include a set of skills necessary for an employee to satisfactorily perform his/her duties in their respective departments. Functional competencies include specific sets of skills required by an individual to perform his specific role in the organization.
Making use of a system that is competency-oriented greatly enhances the beginning stages of performance management, where goals and objectives are formulated. Employees at different levels of the organization are able to understand what is required of them due to the well-structured job requirements that align each individual's role in the organization's chain of command.
An Ongoing Process
Performance management systems are an ongoing endeavour that requires constant attention and monitoring. Failing to maintain set standards on a regular basis may lead to a decline in the quality of the company's performance and output. This process involves:
Performance planning: This stage involves the appraiser and the appraised, in that, the former informs the latter of the responsibilities and objectives they are required to satisfy, by setting realistic, precise and quantitative targets as comprehensive guidelines for them to follow.
Coaching and development: Here, particular emphasis is placed on giving recognition to good performance and providing helpful feedback and guidance to employees. Recognizing noteworthy performances can be a good way of boosting morale and encouraging employees to strive for excellence. Providing continuous counselling and advice can ensure that employees are up to date in the organization's ongoing quest for success and retaining the level of success, once it is achieved.
Interim review: An interim review aims to evaluate employee performance. It is a formal interview or discussion where the evaluating personnel identifies performance results and undertakes appropriate actions, assesses development and training programs, identify any shortcomings or barriers that prevents employees from reaching their full potential and make modifications to the objectives required of the employee.
Human Resources personnel bridge the gap between employers, managers and employees. Therefore, in addition to their other tasks, HR personnel can ensure the fairness of the employee performance appraisal procedures by understanding the employees' concept of fairness and encouraging helpful feedback from employees, thus facilitating better communication between higher-level personnel and lower-level employees.. A fair and transparent system promotes and encourages employees to perform at their best, as the possibilities of achieving promotions and benefit packages are ever present and realistic.
Obviously, PM is one of the most important functions of HRM which links individuals' objectives and organization goals. Thus, PM can be a very effective and efficient management tool if applied properly. An organization should provided its employees with the clear information of the organization's aims, job expectations and motivate employees to perform better by focusing on the desired results, improving communication, and developing the skills and attitudes of employees to better enable them to achieve organizational goals. Moreover, the implementation of performance management frameworks can be both advantageous and disadvantageous for an organization. Analyzing ANZ bank's sources of performance information shows that the implementation of a solid PM framework, coupled with their globally recognized reporting methods enables the organization to adequately evaluate the performance of ANZ's various departments and sectors, including the sales assistance unit. Finally, fairness in evaluating and appraising employees' performance within an organization can motivate employees to enhance their performance. Organizations can achieve this by providing equal opportunities for their employees towards promotion options, access to remuneration and rewards schemes, training/counselling/mentoring/advising, providing clear, concise information and specifying job tasks and so on.
Organizations should continue to review their strategies regularly by focusing on performance management. Organizations should strive to take actions that can facilitate improvements and employee training and also focus on the development of strategies to justify any gaps, if present, between the organization's actual performance and target goals.
Fairness plays an important role in motivating and guiding employees. Although, the concept of fairness may vary from one individual to another, there are certain ideologies, however, that remain constant. For example, it is commonly understood in a workplace that an employee should be rewarded based on his/her performance within the organization. The aspects of fairness that may vary from one individual to another are feelings of how one was treated by his/her employer or manager in regards to a particular scenario. Therefore, it is important for managers and employers to ascertain how their employees perceive fairness. This can be accomplished by providing employees with questionnaires that will enable them to express their take on fairness. This will help higher level personnel to understand their employees more intimately and tailor their remuneration and rewards packages and training opportunities accordingly.
In performance management, the employees are subject to be reviewed by their managers. Employees will directly receive feedback from the members of their team. The team members will observe each other and then report to managers when performance problems occur. Subsequently, the managers should combine the feedback gained from their team members and then undertake the necessary corrective measures.