The pace of global, economic, and technological development makes change an inevitable feature of organizational life (Cummings & Worley, 2002). By creating organizational effectiveness at the individual, department, function, process, and organizational levels, organizations constantly strive to evaluate of their internal and external environment trends for opportunities and challenges in order to remain competitive and to sustain fast growth in the global market. Besides that, it is essential to encourage employees in the organizations to achieve strategic objectives and goals in ensuring the desired employee conducts. By aligning and developing of individual and organizational goals of the workforce, organizations aim to create clear lines communication between employees and managers.
Nowadays many companies rely on performance management system to create competitive advantage. Because performance management system makes clear to employees what is expected of them and assure line managers and strategic planners that employee behaviors will be in line with the company's goals (Noe, Hollenbeck, Gerhart, and Wright, 2003). This process of creating effective performance management requires each employee fully aware of her/his role in the organization. By understanding what type of output is expected and the fundamental roles in achieving the vision, mission, and strategy each employee maximizes the contribution the bottom-line of the organization. An addition, Armstrong and Baron (2004) grouped performance management system into four categories: performance planning, performance monitoring, performance appraisal and training & development.
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Performance planning simply translates organizational goals into results. By theory, those goals can be related to workforce, as well as product's quality, cost, quantity, and timeless. Mangers are very much aware when "goal setting" focuses on employees' performance. Besides, organizational goals must be challenging and S.M.A.R.T (specific, measurable, acceptable, realistic to achieve and time-framed). By motivating employees to achieve company goals are the main tasks traditionally assigned to performance management system. Moreover, managers always try to link individual performance with organizational performance to gain satisfactory results. This link clarifies the role, responsibility and accountability of each employee which aligns the organization's overall mission and strategy.
Performance monitoring is used by managers for measuring work activities, evaluating performance, collecting information/data and refines responsibilities/goals. Properly monitoring the performance information and activities can assist managers whether organizational goals have been done successfully or not. After such kind of analysis managers can make decisions about staffing, communicating and allocating resources. For example, several years ago organizations used largely managerial responsibilities as "managers know best" structure. Today organizations can't operate in that manner. Because currently performance management monitors whole organizational culture and requires employees and managers to work closely together. Appling classic "Maslow's hierarchy needs" theory organizations are looking more closely at employees needs and ensuring that they get all the necessary support by motivating them feel valued for what they contribute. Ahead that, staff members are no longer expected just to "do things right" but to "do the right thing" (Boland & Fowler, 2000).
It is clear that in order to get the desired results the organization must develop, evaluate and reward the desired behaviors. Performance appraisal plays vitally important role on organization's life. An addition, Tziner, (2000) divided performance apparels into two groups: employee development processes (feedback, goal alignments, critiquing performance) and administrative decisions (salary allocations, promotions, and performance assessments). By using these broad purposes organizations create their own performance appraisal system to evaluate and develop employees. Moreover, it's long-term fair competition between employees. Why? The reason is that most organizations use performance appraisal to determine reward and promotion outcomes. Overall appraisal results are used to select best employees who should be promoted or merited pay increases. In the same way, supervisors identify poor performance employees who may be fired or decreased in pay. But organizations must be aware of the law in the resident country where restrict organization's capacity to dismiss employees and decrease salaries. That's why an appropriate use of performance appraisal for the justification of rewards and penalties is a very uncertain and contentious matter. Another issue is mid-year or annual review data of the organizations. In this case, each employee's and manager's performance is reviewed on an individual basis. It calls 360 degree feedback. The main idea such kind of reviews is used to identify how management and workforce performance affect to year-end financial results. Furthermore, if employees and managers review data respectively equal, it means managers and employees have achieved the organizational goals which positively reflect on annual growth of the organization.
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Last but not least, training & development is one of the critical part of performance management system. That's why organizations provide up to date training and development programs for their employees from time to time. For instance, US organizations spend more than $60 billion annually on employee training and development (The American Society for Training & Development). Moreover, after successful training employees acquire knowledge and experience in the required area due to enable her/him to perform more effective performance on the job which affects the business and performance strategy of the organization. In this case, Lynton & Papeek (2000) describe training as indispensable and it becomes strategic if training takes into account long-term organizational goals and objectives. Having goals such as development of new and better products, expanding to a global market, and developing a workforce with core competencies are strategic. Furthermore, managers and shareholders should consider training as an investment rather than a cost due to the purpose of training employees contributes to improve their performance which vitally important for organizations.
Rapidly changing business environment, globalization and dynamic technology developments make products life-cycle ever shorter which require organizations to meet fast changing demand of the customers and involve improving its competitive capacity. If organizations are going to survive today's competitive market and economic downturns, they must generate sustained changes throughout the organization by creating best-effort performance management system with unique managerial techniques and well-motivated employees. However, the organizations should motivate employees to achieve not only organizational goals, but also their personal development goal through the process which fully contributes to the retention of employees. Besides, it is vitally important that organizations think more deeply about measuring the outcomes of their performance management systems.