Task 1 – Performance Management
Increasing complexities in operations of business have resulted in emergence of new and more comprehensive concepts of business management. Performance management refers to a continuousand flexible process of identifying, evaluating, managing, and developing the performance of the human resources in a given organization (Pulakos 2009, p.2). The focus can be on the overall performance of the organization, a specific department, an individual employee, as well as the processes involved in building a product or service. Performance management is a strategy for aligning organizational systems, resources and employees to the strategic objectives and priorities. Therefore, performance management has its focus on the future performance planning, improvement and personal and organizational development. When applied correctly, performance management can be a reliable tool for systematic analysis of the organizational performance as well as a measurement of employee performance (including the communication for the assessment to the individual) and used to improve the overall performance in the long run (Armstrong 2009, p.36).
Performance management is undertaken in an organization to achieve a number of objectives. First, it serves to connect the efforts of the workforce with the organization’s mission, vision, and objectives. Successful achievement of this function makes it possible to make both the workforce and the organization make sense of the contribution of the job performance to the organization. Second, performance management may be conducted for the purpose of setting clear the performance expectations in order to provide the workforce with clear directions on what is required of them to achieve the set goals (Pulakos 2009, p.54). Thus, performance expectations act as the summation of results, actions as well as behaviors. Third, performance management has the objective of focusing on employee’s’ efforts and eliminating the wasteful jobs so as to ensure productive utilization of the work of employees. Performance management is also done for the reason of linking the performance to the career development of employees in order to enable them to comprehend how achieving the performance expectation or exceeding the expectations would contribute to their growth within the organization (Armstrong 2009, p.48). In addition, performance management is done for regular monitoring of performance, both of the employees and the organization at large. Monitoring of employee performance entails coaching, feedback delivery and affording employees flexibility to build their capabilities. Finally, performance management is used evaluate the ongoing processes at the organization.
Two main common underlie the concept of performance management: Goal-setting theory and Expectancy theory. According to the Goal-Setting theory, developed by Edwin Locke (1968), the individual goals set by an employee play a crucial role in in motivating the individual for superior performance (Cardy 2011, p.94). If the employee fails to achieve the goals, he/she either improves his/her performance or modifies the goals to make them more realistic. Improved performance would translate into attainment of the objectives of the performance management system at the organization.
According to Victor Vroom’s (1994) Expectancy Theory, individual modify their behavior in the organization in line with anticipated satisfaction of value goals established by them (Armstrong 2009, p.66). The theory underlies the phenomenon of performance management due to its argument that performance is encouraged by the expectations relating to future events.
Performance management cycle
Performance management process is construed as a continuous self-renewing cycle referred to as Performance management cycle. The cycle begins with core job descriptions and the organization’s strategic plans. It includes such activities as performance development, performance appraisal, monitoring and feedback, together with reformulation of the performance standards (Bhattacharyya 2012, p.18). The cycle continues considering that performance management itself is an ongoing employee and organizational development function. The performance management cycle has four key phases: planning, coaching, reviewing, and rewarding.
i) Planning – the planning phase entails a joint effort to identify individual performance expectations along with gaining the commitment of the employee to meet the expectations. This phase would include induction, agreeing on objectives, competencies and behaviors, and planning personal development. The expected outcome of this phase would be that employee’s work would be linked to the objectives of his/her Unit, and finally to those of his/her Department. It is also expected that the necessary employee knowledge, skills and behavior will be identified in this phase. While both the goal-setting theory and expectancy theory stress on the value of establishing few relatively concrete goals, there may be experienced difficulty of achieving this in practice due to either lack of clear strategic organizational goals or their large volume, inherent instability or diversity (Pulakos 2009, p.87). It is not sufficient to define objectives as there is need for some agreement and understanding pertaining to how performance ought to be measured, which may prove problematic. There exist substantial debate on the degree to which performance goals can be termed as ‘hard’, objective, quantifiable and directly measurable, or as ‘soft’, subjective and targeted at such aspects as behaviors or traits. As such, many organizations resort to using a blend of both hard and soft goals during the planning phase of the performance management cycle.
ii) Monitoring – continuous monitoring of employee progress and performance ensures an effective performance management system. This entails monitoring the day-to-day performance by focusing on the results achieved an the individual behaviors of employees together with team dynamics that affect the work environment (Cardy 2011, p.105). During this phase, the manager and the managed need to meet regularly for the purpose of assessing progress made towards achieving performance objectives, identifying any impediments that may hinder the employee from meeting the performance objectives and the right course of action needed to overcome them. It is also at this phase that the employer and employee share feedback pertaining to the progress relative to the set goals. Any necessary changes to the work plan due to a shift in organization priorities employee taking on new responsibilities should also be identified. Determination of any additional support needed from the manager or others in order to assist the employee attain his/her objectives should also be identified.
iii) Reviewing –formal assessment is an integral part of any performance measurement system as well as performance appraisal commonly used to review performance against established objectives. The Review phase would entail jointly assessing actual employee expectations when the end of the performance cycle is reached for the purpose of reviewing and documenting planned performance as measured against actual performance (Bhattacharyya 2012, p.25). This stage would thus involve taking appropriate action on the information gathered from the preceding cycles to assess the progress and achievement, provide feedback and modify the plan if necessary.
iv) Rewarding – the rewarding phase would involve establishing the connection between performance and reward. The aim would be to direct and reinforce commendable work behavior through determination and allocation of equitable and appropriate rewards to deserving employees. Armstrong’s (2002) concept of ‘total reward’ explains financial and non-financial aspects or reward. As relates to performance management, financial or extrinsic rewards refer to the merit or contingent pay i.e. where an aspect of pay is at risk and reliant onperformance, applying performance management in making decisions on the apportionment of such reward are made. On the other hand, non-financial or intrinsic rewards relate to such elements as recognition, development, career guidance, access to other assignments and the quality of working life, mainly delivered through developmental forms of performance management. However, debate persists over the feasibility of a performance measurement system that attains both goals. The tension between the two aims necessitates basing PMS entirely on developmental aspects i.e. apportionment of merit pay or pay increment should be undertaken through alternative mechanisms (Bhattacharyya 2012, p.32).
Managing poor performance through performance management cycle
Poor performance can be said to the inability of a member of an organization to perform the duties of his/her position at an acceptable level. Managing poor performance in an organization need to be perceived as a two way process, that is, the manager and the managed have equal responsibility for its management. Performance standards must be clearly established at the start of each performance cycle and guidelines for dealing with poor management at the organization. Poor performance often result from lack of necessary skills and competencies, lack of motivation, lack of instruction or training, lack of clearly-stated performance standards, inappropriate behavior, or some underlying personal problem and/or medical problem which affects performance at work (Cardy 2011, p.124). In managing poor performance, the following poor performance management map needs to be followed.
New Performance Management System at the Organization
The growth of our business has exceeded the capability of the current internal management procedures and practices. There is need for introduction of a new form of performance management system to adequately cope with the new business demands and the workforce of 250 employees. The proposed PMS aims to have our employees fully understand the roles, and how their performance contributes to our corporate goals, and focus on achieving results.
The business will clearly communicate corporate program to all employees to help them align ‘My Performance Profile’ plans with the corporate goals. All members of staff will thus be evaluated following a common evaluation. For efficiency, both managers and employees will have to actively participate in the entire performance management process where they will engage in open and honest discussions relating to the employee’s performance. Further, managers will be obliged to provide employees with on-going feedback about their performance.
The proposed management systems will be a cyclical process that will be repeated annually. It will involve three phases: planning, mid-point discussion, and final performance evaluation.
a) Planning – managers will hold meetings with the employees with the objecting of establishing key work goals and behaviors that will support attainment of organization’s business plan. The key work goals will need to be measurable while the behaviors will have to be demonstrable. This phase shall include preparing a My Performance Profile for attaining the set key works goals and behaviors. Both the manager and employee will have to discuss the specific employee’s career goals, aspiration, as well any other related development activities.
b) Mid-point discussion – mid way through the way, the managers and employees will meet to review progress to-date as relates to the goals established in the plan. Managers will provide initial feedback and effect any necessary adjustments to the initially written plan. Ideally, managers and employees will have an on-going conversation through the course of the year pertaining to job performance.
c) Final performance Evaluation – managers will present a written evaluation of the employees’ success in attaining the targeted goals and behaviors established in the plan. The evaluation will have to be objective and entirely based on the agreed upon measures of success. Performance will be evaluated using a common set of predefined criteria. Follow-up actions will be taken where needed. Good performance will need to be recognizable while poor performance will have to be clearly and consistently dealt with. This final written evaluation will become permanent in the employee’s record.
Task 2 – Reward System
In the current increasingly competitive business environment, every company requires a strategic reward system for its employees addressing four main areas: compensation, benefits, recognition, and appreciation (Jensen & Stark 2007, p.68). Employee reward systems refer to the programs established by a business to reward performance and motivate them on individual and/or group levels. Rewards need to separate from salary though they may be in monetary form. An increasing number of small business are adopting reward systems as a tool for increasing employee performance as well as attracting high skilled workforce in a competitive job market. The failing of most reward systems in most business today is that they are either missing recognition and/or appreciation, or the elements exist in the reward system but are not adequately aligned with the business’ other corporate strategies (Macky & Wilson 2013, p.89). The type of employee reward and recognition programs at a company influence their attitudes to work. Best reward and recognition programs often serve as major motivators of employees to change their work habits along with key behaviors to the benefit of the business.
In developing an effective reward system at a small business, the owners/managers need to distinguish the reward system from the salary or merit pay system. Financial rewards such as those awarded to employees on regular basis e.g. bonuses and profit sharing, need to be linked with an employee’s or group’s achievements (Macky & Wilson 2013, p.89). Such rewards ought to be regarded “pay at risk” for distinguishing them from salary. In this sense, a manager avoids a sense of entitlement on the employee’s part besides ensuring that the reward is given according to excellence or accomplishment as opposed to basic competency (Jensen & Stark 2007, p.69). A best reward system would thus reward employee’s performance and behavior. The company may gauge employee attitudes towards work through confidential attitude surveys of exit interviews.
Therefore, in designing a best reward system for enthusiastic employees, the owner/manager would need to do the following:
– The owner/manager designing the new reward program will need to identify corporate goals to be achieved, employee performance and desired behaviors that will contribute to their achievement. For example, if teamwork is one of the business goals, employees whose positive attitudes contribute to improved cooperation should be given a bonus.
– Determine the key measurements of performance or behavior basing on the individual employee’s or company’s previous achievements,
– Determine appropriate rewards according to level of enthusiasm of individual employees
– Communicate the program to employees (Jensen & Stark 2007, p.70).
Considering that rewarding employees cost the business in terms of money and time, the owner/manager of the small business needs to ascertain that employees have positive attitudes towards work and have contributed to improved performance before rewarding them. This can be measured through other things as perfect attendance, reduced company costs due to employee’s improved contract negotiation (Macky & Wilson 2013, p.90). As such, the owner needs to align rewards with the end-result for the business.
Finally, the specifics will need to be clearly defined for every employee in order for the reward system to be successful. This is especially because motivation is dependent on the individual employee’s ability to comprehend what is being expected of him or her. Thereafter, the owner/manager would need to support the initial communication with frequent meeting or memos promoting the new reward system for enthusiastic employees (Jensen & Stark 2007). In conclusion, it is worth noting that employee enthusiasm significantly helps the company to develop competitive advantages especially for business with ability to manage for long-term results, thus need for effective reward systems for employees with positive attitudes towards work.
Bibliography
ARMSTRONG, M., & ARMSTRONG, M. (2009). Armstrong’s handbook of performance management an evidence-based guide to delivering high performance. London, Kogan.
BHATTACHARYYA, D. K. (2011). Performance management systems and strategies. Dehli, Pearson.
CARDY, R. L. (2011). Performance management: concepts, skills, and exercises. [S.l.], M E Sharp.
JENSEN, D., MCMULLEN, T., & STARK, M. (2007). The manager’s guide to rewards: what you need to know to get the best for–and from–your employees. New York, AMACOM, American Management Association.
Macky, K. & Wilson, M. (2013). Rewards, Renumeration and Performance: A Strategic Approach. Northcote, CCH New Zealand Limited.
PULAKOS, E. D. (2009). Performance Management a New Approach for Driving Business Results. Chichester, John Wiley & Sons.
