The Role and Advantages of a Performance Management System
Performance Management as a Crucial Aspect of Success
The role of performance management (PM) in a company’s operations and successful development cannot be overstated. Through the use of carefully selected approaches, one can provide high-quality work in all departments and at all levels. One of the core functions of PM is directing employees towards the firm’s goals and objectives, as well as towards its mission and vision (Stredwick 2005). PM is expected to fulfill two important sets of goals: cultural and operational. The cultural perspective includes fairness, motivation, openness, and trust (Stredwick 2005). The operational perspective relates to communication, control, and effectiveness (Stredwick 2005).
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Performance Management at Chicken Co.
Unfortunately, despite the importance of successfully developing a PM strategy, Chicken Co. seems to have neglected this aspect. First of all, its employees do not have a clear vision of what the organization is doing. In their opinion, the owner-manager takes care only of his personal interests and neglects those of his personnel. According to Stredwick (2005), making sure that corporate goals are explained to every employee belongs to the primary stage of PM. However, no such explanation can be observed at Chicken Co. One of the probable causes of poor PM in the organization is its insufficient human resource (HR) management efforts. As Kinnie and Swart (2017) remark, there is a close association between a firm’s performance and its HR management. Moreover, scholars note that the significance of this link is growing. Meanwhile, at Chicken Co., there seem to be no effective HR practices that would promote the growth of employees’ achievements. People do not seem interested in their tasks since they see no opportunities for growth.
Performance Management System and Other Human Resource Management Processes
The major benefit of HR management is the increase in employee involvement and participation. According to Dundon and Wilkinson (2017, p. 407), employee involvement is “the central pillar” of HR management. Thus, it seems relevant to view PM in connection with HR practices as a constructive approach to improving organizational performance. This aspect is especially pertinent to Chicken Co. since its employees are not satisfied with their current position, which leads to their low participation and involvement. An advantage of the company’s current system of HR practices is that the divisional director has split all workers into several teams. The serious disadvantage of this system is that team leaders have not been offered any training, and they do not realize what their roles are.
The best way of combining PM and HR practices with the aim of improving performance is to take into consideration the various processes of HR management. Probably the most crucial of these is planning, which enables managers to predict employee relations and loyalty. Other vital processes are auditing, training and development, knowledge sharing, and rewarding (Johnson, Scholes & Whittington 2005). As can be deducted from the case study, all of these processes are neglected by management, which leads to low performance and poor employee satisfaction.
Finally, there is one more HR process that has not been analyzed by either the owner-manager or the divisional director: recruitment. The owner-manager hired the majority of his personnel a long time ago, and there is no evidence of carefully selected recruitment procedures. A year ago, when the divisional manager was appointed, employees’ motivation and enthusiasm were not evaluated. In contrast, recruitment is regarded as the main method of enhancing the strategic capability of any organization (Johnson, Scholes & Whittington 2005). This HR process includes redundancy and redeployment planning, which can promote positive changes in the company (Johnson, Scholes & Whittington 2005).
Individual Versus Team Performance Targets
The Role of Individuals and Teams in PM
For any organization, setting goals for its performance is the basic approach towards understanding the direction in which every employee and the company as a whole should progress. Each worker may have their own targets, whereas the firm has identified the major objectives. In the best case, these two sets of goals coincide, bringing benefits to all participants in the process. However, on some occasions, a company may neglect its employees’ objectives, or workers may ignore the organization’s needs. Any of these situations – or even worse, their combination – can lead to detrimental outcomes.
Setting performance goals correctly is one of the factors affecting the level of employee commitment. The better-developed HR practices are, the higher the level of loyalty and productivity demonstrated by workers (Torrington, Hall & Taylor 2005). That is why it is crucial to establish both individual and team goals wisely. Employee performance objectives may include participating in decision making, having space for development, gaining control of certain work operations, and obtaining the ability to balance one’s work with one’s personal life. Meanwhile, team goals may involve such aspects as gaining more flexibility, reaching a higher level of collaboration, and obtaining substantial rewards for the team’s achievements. When the two sets of performance goals are well constructed, both individuals and the organization as a whole are winners.
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Individual and Team Performance Goals at Chicken Co.
The major problem with performance goals at various levels at Chicken Co. is the lack of clarity concerning these objectives. The owner-manager clearly has the ambition to increase sales and maintain his firm’s performance. However, he does nothing to encourage his workers to aspire to the same goal. Even the appointment of the division director has not improved the situation. Though the teams have been formulated and team managers selected, it is not apparent what goals employees should pursue. As a result, they follow the same basic goal that their company’s owner has: to increase their financial profit. Therefore, it is necessary to conclude that Chicken Co. has no team goals and poorly established personal goals. As a result, the organization faces the risk of losing profitability and decreasing performance.
Maximizing the Firm’s Performance Through Setting Goals Correctly
It is not the case that either individual goals or team performance objectives alone can help the company to enhance its productivity. Rather, it is the combination of various goals that have the potential to maximize performance. As was seen with previously analyzed aspects, it is necessary to take into account the absence of clear role distinctions at Chicken Co. As a result of this deficiency, employees’ goals tend not to align with their employer’s targets. As Johnson, Scholes, and Whittington (2005) note, the lack of connection between the individual and team goals can lead to serious ethical dilemmas which may result in employees quitting their jobs or being in a state of permanent dissatisfaction.
To maximize the performance of Chicken Co., it is necessary to set goals clearly and, more importantly, to let employees participate in the process of outlining the objectives. By doing so, the owner-manager and the divisional director will obtain maximum rather than typical performance (Klehe, Grazi & Mukherjee 2015). In addition to this suggestion, it is crucial to explain the alignment between individual and team targets so that every worker will realize their significance to the firm’s operations and vice versa. That way, at all levels of the firm, there will be a clear understanding of the responsibilities each working unit has in the company’s general plan of operations.
Using Performance Management to Improve Employee Development
Challenges Facing Chicken Co.
At present, the company is exposed to risk from several challenging tendencies that affect performance in an adverse way. The first problem is the likelihood of high employee turnover. The workers’ dissatisfaction is constantly growing, and the owner-manager may encounter the problem of people leaving if their needs are not met promptly. The second challenge is closely linked to the first one, and it is the likelihood of losing a competitive advantage. Laborers who are unhappy with their work environment, salary level, and payment conditions, and unclear goals and vision, are not likely to perform at their highest potential. In that case, the owner of the company may risk losing profits due to low-quality products.
Another problem is that even devoted and loyal employees may lose their enthusiasm because of the unclear team division and the absence of precise requirements for each team’s activities. Although the processes at Chicken Co. do not seem complicated, and the organization has been operating for many years, it is crucial to remind people what their goals are and teach them how to reach these goals. Otherwise, the owner-manager risks losing not only workers but also customers.
Using the Performance Management System to Improve Employee Development and Communications at Chicken Co.
Given the deficiencies in Chicken Co.’s PM system identified here, the primary action to be undertaken is to make sure that all employees share corporate values and goals. To do so, the divisional manager should discuss company values with the owner-manager and arrange a meeting with all employee teams: the sales department, the processing operation team, and the administrative division. The next significant step in improving employee development is negotiating an individual performance plan with each employee. These plans should be integrated with the department’s plan (Stredwick 2005). Another requirement is that the performance plan should help employees to enhance their achievements. Thus, it will be necessary to think of ways to maximize productivity and minimize risks in each worker’s operations. In addition, the plan should provide a clear strategy for measuring performance.
The next important function of a performance plan is identifying the types of rewards that employees will receive if they demonstrate excellence in their achievements (Stredwick 2005). Chicken Co. needs to pay particularly close attention to this aspect. A year ago, when the owner-manager was still controlling all processes in the company, no bonuses or benefits were suggested to employees at all. Then, when the divisional director was hired, workers started to receive some bonuses when they reached weekly targets. However, as the evidence indicates, no improvements in productivity or quality were gained. Thus, one likely solution is paying more attention to explaining the company’s goals and processes to employees in order to increase their commitment.
Cook (2009) defines reliability, validity, practicality, and the absence of bias as the major requirements of dedicated employees. Also, Cook (2009) emphasizes the role of employee productivity in companies’ success. However, the analysis shows that the bonuses introduced by the divisional director are insufficient to raise employee satisfaction and dedication. Therefore, it seems prudent to revise the company’s current system of awards. As Stredwick (2005) notes, the performance plan should include a detailed description of both the intrinsic and extrinsic rewards workers can expect. In these ways, a PM system in general, and a PM plan in particular, can play a positive role in enhancing employee development. Therefore, PM should be employed by Chicken Co. in order to increase productivity, which will eventually lead to the improved performance of the whole firm.
Cook, M 2009, Personnel selection: adding value through people, 5th edn, Wiley-Blackwell, Chichester.
Dundon, T & Wilkinson, A 2017, ‘Employee involvement and participation’, in A Wilkinson, T Redman & T Dundon (eds), Contemporary human resource management: text and cases, 5th edn, Pearson, Harlow, pp. 407-428.
Johnson, G, Scholes, K & Whittington, R 2005, Exploring corporate strategy: text and cases, 7th edn, Prentice Hall, London.
Kinnie, N & Swart, J 2017, ‘Human resource management and organizational performance: in search of the HR advantage’, in A Wilkinson, T Redman & T Dundon (eds), Contemporary human resource management: text and cases, 5th edn, Pearson, Harlow, pp. 34-78.
Klehe, U-C, Grazi, J & Mukherjee, T 2015, ‘Typical and maximum performance’, in I Nikolaou & JK Oostrom (eds), Employee recruitment, selection, and assessment: contemporary issues for theory and practice, Psychology Press, Hove, pp. 228-244.
Stredwick, J 2005, An introduction to human resource management, 2nd edn, Elsevier, London.
Torrington, D, Hall, L & Taylor, S 2005, Human resource management, 6th edn, Prentice Hall, Harlow.
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