Performance Management System: Role and Advantages

Role and Advantages of a Performance Management System

Performance management systems play an important role in the achievement of organisational goals, mission, and vision. For any firm to perform optimally and attain its set objectives, the management should come up with both long-term and short-term goals that require specific actions to be undertaken consistently in a given manner. The role of performance management systems is to facilitate the attainment of these goals, whether at an individual, team, or corporate levels.

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The core benefit of performance management is that it optimises one of the most important assets – human resource. When employees’ output is at the maximum, organisations benefit in various ways. First, workers have increased focus, which ultimately drives business results. Within such a system, all organisational goals are aligned with the employees’ day-to-day activities that support the company’s mission and vision. Second, performance management leads to an engaged and empowered workforce. Such workers have a sense of shared accountability, which is ingrained in the organisational culture allowing for career development and growth.

Finally, performance management sets the foundational for talent appraisal and knowledge development. High and low performers can be identified and tracked to evaluate the effectiveness and progress of the available employee development tasks.

Performance management could be implemented with other HR processes to improve organisational success through setting and revising goals, coaching, development planning, and rewards and recognition. For instance, management and coaching are key HR functions. However, performance appraisals could be used to identify gaps in workers’ skill sets after which coaching and mentoring are used to support employees to achieve their targets. Similarly, HR uses rewards and recognition as part of employee motivation (Rozman, Treven & Čančer 2017). Performance management could use this HR function to help employees get balanced negative and positive feedback concerning their achievements.

In the case study, after learning about the employees’ dissatisfaction caused by the pay freeze, the Divisional Director created a scheme to give bonuses to team members after attaining the set production targets. This approach worked and produced positive results, albeit marginally. When the Divisional Director took over from the manager-owner, it was clear that employees were dissatisfied and demotivated. Therefore, he thought of a way of countering these negative attributes that affected the workers’ productivity.

Giving rewards and bonuses to employees is a core HR function, which is used as a way of extrinsic motivation to ultimately improve productivity. However, in this case, the Divisional Director used this key HR function as part of performance management to motivate the employees because they had been suffering from the pay freeze under the autocratic leadership of the owner-manager.

Nevertheless, performance management systems are associated with some disadvantages. First, the process is time-consuming and complex. Time is valuable and it can be wasted in the implementation process of performance management especially in large organisations. Every employee has to be monitored and evaluated, meetings are held to discuss the noted problems, and solutions are identified to ensure the effectiveness of the process. Second, if not managed properly, the system could be a hindrance to employees’ progress because the involved activities might be unpleasant and stressful (Brown et al. 2019).

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Managers implementing the system may be biased, thus affecting the effectiveness of the entire process. For instance, a manager may focus on the employees’ errors and mistakes, and this issue discourages and dissuades the affected workers, who may feel unappreciated. This problem could be addressed by ensuring that performance management is a constructive support process where mistakes are pointed out subtly and even the smallest successes celebrated accordingly.

Individual vs. Team Performance

Organisations could use both individual and team performance appraisals. However, each approach, whether individual or team, has merits and demerits that should be considered before deciding the one that works best in a given company. Individual appraisals focus on setting targets for individuals and rewarding them accordingly based on their achievements. This form of recognition is important because it acknowledges individual efforts that go into achieving a given performance target.

Besides, it appreciates individuals for their contribution to the achievement of a particular goal. Additionally, outstanding employees are recognised within a given work environment using different aspects, such as someone’s behaviour, support to others, performance, or effectiveness (Pradhan & Jena 2017). On the other hand, team performance appraisals reward groups of employees for their combined efforts towards the achievement of a particular goal. For effective team performance management, all members should understand the set goals, communication should be open, sufficient leadership and team structure are needed, enough resources, and team synergy should exist.

One of the advantages of individual performance appraisal is that it helps companies to retain the best employees. When workers are compensated based on their performance, they feel appreciated, and thus they are likely to stay longer in a given organisation. Additionally, it allows employees to think independently, which increases their confidence to work at their individual levels as opposed to adapting to fit into groups. Such employees are likely to grow and develop their careers.

However, several disadvantages are associated with this performance appraisal system. First, those not rewarded may be demotivated leading to poor performance. Besides, employees may become disengaged especially when they feel that the rewards are not commensurate to their achievements. This system may also create imbalanced pay and grading structure especially when some individuals receive huge salary increases. Finally, employees may become jealous of one another, hence poor working relationships and reduced performance.

Advantages of team performance management include facilitating multidimensional thinking from all members hence improved creativity and innovation. Responsibilities are delegated through shared knowledge to improve the problem-solving capabilities of the teams (Mone & London 2017). Finally, it encourages peer cooperation and the sharing of information, which lead to increased team knowledge. However, this system may be unfair because employees are rewarded equally yet their levels of contribution to the shared success might be varying.

It also encourages social loafing whereby employees’ will to work as a team reduces and their efforts decrease as compared to when working individually. In some cases, team performance appraisals may be counterproductive leading to competition instead of cooperation.

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Specifically, when employees feel that some of their team members do not work as hard as required, they may resort to unhealthy competition and backstabbing to ensure that lazy individuals are sacked. Ultimately, this working relationship is toxic and it can affect an entire department leading to minimal productivity and losses. The disadvantages of team performance management were evident at Chicken Co. as explained in the next paragraph.

The Divisional Director at Chicken Co. used team performance management, and it backfired. While bonuses were given to team members based on their shared performance, the employees complained of different issues. For instance, some of the workers claimed that the bonuses were so minimal that they made no difference in their lives.

In other words, these employees were complaining that while giving bonuses was a good motivational approach, it could have worked better if each individual was rewarded independently based on his or her efforts and achievements. Therefore, the performance appraisal did not work as expected. However, if employees were rewarded individually, they could view the size of their bonuses as a direct function of their achievements. As such, everyone would work extra hard to beat and exceed the set targets and get proportionate bonuses.

Performance Management at Chicken Co.

Performance management systems could be used to improve employees’ development and communication at individual and team levels. The system should have clearly stated roles for the involved individuals and teams. This strategy minimises cases of conflicts among workers, especially those who find out that their colleagues are handling almost similar tasks. Such a duplication of duties result in inefficient accomplishment of goals and objectives set for particular departments. Besides, established performance measures should be included with the support of managers and supervisors.

For the system to work effectively, performance expectations should be communicated regularly, and employees held accountable for their actions and achievements. Workers should enjoy continuous personal development through coaching and mentoring. Additionally, performance management systems should align individual or team goals to those of the department and the entire organisation. Consequently, every achievement would be geared towards achieving the set organisational goals. Finally, the system has to link performance to rewards and recognition, whether at an individual or team levels. This plan is founded on the awareness that incentives influence the level of employees’ commitment to realizing their respective organizations’ mission and vision.

Some of the challenges facing Chicken Co. include the existence of a poor performance management system. The Divisional Director has not defined the role of each team leader, and no training has been offered. Besides, the team leaders were selected at the management’s discretion, hence resentment from the employees. Finally, employees do not feel that they are involved in decision-making, which explains why attitude change has been minimal despite the efforts made by the Divisional Director.

This situation may result in resistance to reforms, especially when the proposed changes fail to recognize workers’ input. Since employees are directly involved in implementing an organization’s mission, it is crucial for leaders to consider their views when executing structural transformations. However, the Divisional Manager can apply some specific tactics to turn the situation around and achieve the desired results.

To fix these problems, the Divisional Director, together with the owner-manager, should come up with a strategy to implement an effective performance management system. First, they should link employees’ activities with organisational goals. This aspect would allow continuous assessment and evaluation to determine whether employees’ day-to-day activities are propelling the company in the right direction. The system should provide room for employee training, coaching, and mentoring to achieve specific organisational strategic goals (Wilkinson, Redman & Dundon 2017).

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Coaching and mentoring are core performance factors, and thus every employee should be exposed to the same. Chicken Co. might have some of the best employees in its history. However, without proper training and coaching to exploit their talent, the employees’ performance may be mediocre because they do not know what is expected of them, and how to achieve it.

Additionally, the system should allow employees to participate in making certain decisions, such as nominating team leaders. Additionally, there should be regular communication of strategic goals both functionally and vertically. Both team and individual performance appraisals should be incorporated for a motivated workforce (Kruse 2014). The management should create a system of getting regular feedback from employees together with carrying audits to identify areas of improvement. This process will allow Chicken Co. to achieve its set goals as supported by motivated and satisfied employees.

Reference List

Brown, T, O’Kane, P, Mazumdar, B & McCracken, M 2019, ‘Performance management: a scoping review of the literature and an agenda for future research’, Human Resource Development Review, vol.18, no. 1, pp. 47-82.

Kruse, K 2014, Employee engagement 2.0: how to motivate your team for high performance (a real-world guide for busy managers), 6th edn, The Kruse Group, Richboro.

Mone, EM & London, M 2017, Employee engagement through effective performance management: a practical guide for managers, 2nd edn, Routledge, New York, NY.

Pradhan, RK & Jena, LK 2017, ‘Employee performance at workplace: conceptual model and empirical validation’, Business Perspectives and Research, vol. 5, no. 1, pp. 69-85.

Rozman, M, Treven, S & Čančer, V 2017, ‘Motivation and satisfaction of employees in the workplace’, Business Systems Research, vol. 8, no. 2, pp. 14-25.

Wilkinson, A, Redman, T & Dundon, T 2017, Contemporary human resource management, 5th edn, Pearson, London.

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