Organizations Need Ever Improving Performance Commerce Essay


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Organizations need ever-improving performance to survive and prosper in the market. To stay competitive, employee and the organization performance improvements is the key for survival. Rapid change, squeeze budget, downsizing and restructuring has resulted for greater employee accountability and an ideal way to measure it is through Performance Management.

So, what is actually Performance Management? Different scholar may interpret Performance Management with different definition. To list some:

Susan M. Heathfield (2011) underline Performance Management as one of the key processes that, when effectively carried out, helps employees know that their contributions are recognized and acknowledged. Performance management is an ongoing process of communication between a supervisor and an employee that occurs throughout the year, in support of accomplishing the strategic objectives of the organization. The communication process includes clarifying expectations, setting objectives, identifying goals, providing feedback, and evaluating results.

Micheal Amstrong (2000) quoted Performance Management as a process which is designed to improve organizational, team and individual performance and which is owned and driven by the line managers.

While Nankervis (2002) defined Performance Management as an assessment of an employee, process, equipment or other factor to gauge progress toward predetermined goals.

And Fischer (1992) determined that Performance Management as a set of activities which ensure that goals are achieved in the most effective manner.

In a nutshell Performance Management is an ongoing, continuous process of communicating and clarifying job responsibilities, priorities and performance expectations in order to ensure mutual understanding between supervisor and employee. It is a concept which values and encourages employee development through a style of management which provides frequent feedback and fosters teamwork. It emphasizes communication and focuses on adding value to the organization by promoting improved job performance and encouraging skill development. Performance Management involves clarifying the job duties, defining performance standards, evaluating and discussing performance with each employee.

Cycle of Performance Management

Despite what have been said by some or the scholars on the definition and understanding, Performance Management will not be successful if it was designed to work in silos. It is crucially important to align Performance Management process with the organization aspiration, mission, objective and target. It shall be cascaded down from top to bottom form organizational level to functional to unit or group and finally to each individual in the organization. The philosophy is to make everybody in the organization holds a critical responsibility and be assigned significant weightage in order to ensure the organization achieve its target and maintain competitive in the market.

Organizational mission

What is the purpose of the organization? Why does it exist?

Performance Improvement


Action to Achieve







Organizational Objectives

What must be achieved to fulfil the purpose of the organization?

Functional Objectives

What specific results must individual functions achieve to help the organization achieve its objectives?

Performance Improvement


Action to Achieve







Unit or Group Objectives

What specific results must individual groups or units achieve to help the entire functions achieve its objective?

Performance Improvement


Action to Achieve







Performance Improvement


Action to Achieve







Individual Objectives

What specific results must the individual achieve to help the group or unit achieve its objectives?

Total Integrated Performance Management Framework

Methods for Performance Management

There are various methods being used by different organization. To name some :

1. Critical incident method

2. Paired comparison analysis

3. Graphic rating scales

4. Essay Evaluation

5. Behaviorally anchored rating scales

6. Performance ranking method

7. Management By Objectives (MBO)

8. 360 degree performance appraisal

But the most commonly implemented method is Balanced Scorecard. So what does it mean by Balanced Scorecard?

The balanced scorecard is a strategic planning and management system that is used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals.

It was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance.

To provide timely and accurate funding dataThe balanced scorecard emphasise on four perspectives as per below:

To analyze in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups.

To guide managers in focusing training funds where they can help to address their subordinate’s knowledge gap.

To allow the managers to know how well their business is running, and whether its products and services conform to customer requirements.

Error in Performance Appraisal

1. Rater errors

Rater errors happen when employee’s performance resulting from leniency, or strictness, or bias, or recency effect and the like.

Halo Effect

Central Tendency

Liniency/strictness Bias


Recency Effect

Relationship Effect

Gossip in Performance Management

You probably would like to ask, what does gossip to do with Performance Management. Well perhaps you might not find it any textbook. Nonetheless, gossip does contribute significant effect to Performance Management activities especially when it comes to Performance Appraisal. Now, if we look at what have been said on the effect in Performance Management, right from Rater Errors till Relationship Effect gossip may have some percentage of influence when it comes to performance assessment been done.

Why people gossip

There are many different reasons why people gossip in the workplace; but, they all drop down to one word which is NEED. Gossiping in the workplace helps people satisfy unmet needs and as long as those needs continue to be unmet the gossip will continue.

Some of the different needs for gossip are as follows:

1. Need to feel superior.

This is the gossip where the gossipers will eventually pointing out their flaws to other people and if there is no flaw to their targeted person, they will make them up. Their ultimate objective is to meet their need to feel superior.

2. Need for respect.

These gossipers have a need to be the ones that people go to find out what is going on. They need to feel they are the experts or the source of information and go to people to spread it up among the group.

3. Need to belong.

Most people want to be part of a group and being able to contribute to the gossip mill helps them to belong and fit in. These people are usually harmless; unless the gossip they are contributing to is of a malicious nature. They usually not the one who start to spread the gossip; but, they do add to it and help "flesh it out" with their own observations. Being part of the group is their ultimate goal.

Type of gossip

Critical, Judgmental Words

Dodging a cold or flu virus isn't just about washing your hands or avoiding people who are sick. Watch your words: "Did you hear they bought a powerboat even though they're still paying for the Hummer? I heard they have to remortgage their house."

Talking about your coworkers negatively don't just spread negativity and make you look bad, they affect your physical health.

Whining and Complaining

Though whining and complaining isn't always about workplace gossip, it does affect your professional relationships and your health. "Maintaining a negative mood for a long time is harmful to your health" says psychology professor Scott Hemenover (Kansas State University). "The key isn't how stressed you are, but how long you are stressed. Staying stressed for a long time can impair your immune and cardiovascular functions."

Learning how to cope with work stress and anxiety can improve productivity levels and decrease depression.

Rude, Inconsiderate Words

Most of us deny that we're cruel â€" and we're probably right. After all we don't deliberately spread malicious gossip at work, right? But there are "harmless" slips that can have the same effect as negative gossip or stressful situations: snubbing colleagues, name dropping, refusing to give appropriate credit. Those may not seem to be acts of cruelty…but your body doesn't know that.

Cortisol is a stress hormone that floods your system when you're simply thinking about a negative or stressful event. When you imagine throttling your colleague or secretary (perhaps because they're spreading gossip at work!), your physical response can lead to hypertension, depression, insomnia, fatigue, and gastrointestinal disorders. Your words cause similar reactions. Sarcasm, pointed remarks, thoughtless comments or rude words all cause feelings of disorder and chaos, which negatively affects your health.

Gossip impact in Performance Management

Organizational Performance

Team Performance

Individual Performance

Addressing Gossiping in Performance Management

Give your employee the appropriate scores on her performance evaluation for things like quality of work, quantity of work, initiative and adaptability.

Give your employee scores for fundamentals like cooperation, employee relations, communication and leadership skills that reflect how minor or serious his tendency to gossip is. Consider highlighting those numbers and writing "come see me" next to them.

Talk to your employee about her work. Praise or give constructive criticism as necessary.

Tell your employee that his scores for things like cooperation, employee relations, communication skills and leadership skills are lower than they would ordinarily be because of his tendency to gossip. Explain that you think gossip hurts productivity, morale and communication in the workplace. Explain why.

Tell your employee that, as suggested by the website Employee Performance Solutions, "While it's only natural to be interested in what's going on in other people's lives, I'd like you to resist the temptation to share personal information that you may be privy to or have learned from others."

Tell your employee that if she is frustrated with a company policy or procedure, or finds that something unfair or unjust has occurred, she is to express her concerns to you directly.

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