Concepts Of Performance Management In Human Resources

Abstract

Performance management is becoming increasingly important in the department of Human Resources in recent years. It refers to a systematic instrument for improving the development of individuals, teams and organizations. With the wide acceptance of performance management to the organizations, how can it be understood, accepted and implemented by managers and employees effectively in practice? The paper makes a study on the performance management from the perspective of Human Resources, analyses the definitions and process of performance management and discusses the positive and negative effects of performance management. Overall, it will be argued that the positive effects of performance management outweigh its negative effects, but it is also necessary to pay attention to its disadvantages, such as judgement errors caused by distortion of performance information.

Performance Management in HR

â… . Introduction

The concept of performance has been around for more than a hundred years, experiencing some remarkable changes in the process of performance developments and subsequently integrating into the Human Resources Management system. Performance management, as one of the most important parts in these development procedures, has attracted intensifying attention in many organizations. In addition, economical globalization, speedy development of technology and high capitalizations are conspicuous trends in this fast-paced society, people have to promote their performance and become more flexible to satisfy the needs of this fast-changing and competitive society. Hence, how to select employees, who are regarded as an organization’s greatest assets, plays a dominant role in avoiding companies to fall behind their competitors. Simultaneously how to keep the talent and how to encourage them to give their maximum ability to improve the competitiveness of company are crucial issues to managers. Efficient use of performance management can help the company to solve such problems.

In this essay, a clear definition of performance and performance management will be given firstly by the analysis of different interpretations put forward by many scholars. Then from four steps, including planning, implementation, appraisal and feedback, it will introduce performance management process. Finally, this essay will attempt to demonstrate that the positive effects of performance management are more significant than the negative.

â…¡. Defining the concepts

A. What is performance?

Performance management is obviously to do with performance, and what is meant by that word? There are two dissimilar views on the definition of performance. One is the outputs and outcomes of activities, Bernadin et al (1995, cited in Armstrong 2000: 3) states that “performance should be defined as outcomes of work because they provide the strongest linkage to the strategic goals of the organization, customer satisfaction, and economic contributions”. An alternative view contends that performance is behaviour, including working proficiency, literacy and efforts. Campell (1900, cited in Armstrong 2000: 3) believes that “performance is behaviour and should be distinguished from outcomes because they can be contaminated by systems factors”.

Actually, in the practice of performance management in HR, managers usually intend to use a more comprehensive view of performance, which includes outputs and behaviour, because they have a mutual relationship of complementation, the behaviour is deemed to be one of the indispensable conditions to reach outcomes or outputs of performance. This view is concluded by Brumbrach (1988, cited in Armstrong 2000: 3) that performance is composed of behaviour and outcomes or outputs. Performer tries his or her best to turn abstract plans or behaviour into some concrete outcomes. In other words, behaviour is an instrument for gaining results.

To summarize, an overall definition of performance should consist of behaviour and results, and these two elements need to be taken into account when measuring the performance of individuals and teams.

B. Performance management

Performance management is an essential part in HRM, which has become increasingly popular since the 1980s. Dransfield (2000: 69) states that “performance management is a process which is designed to improve organizational, team and individual performance and which is owned and driven by line managers”.

According to Dransfield’s (2000) definition, currently, there are three different viewpoints on the definition of performance management. The first one is to be understood as organizational performance. It means that the implementation of organization strategies should emphasize on the adjustment of organizational structure, business process, technology and targets. The second viewpoint is that performance management is a means of getting better results from teams. Performance management applies to everyone in the business team, not just managers, but also employees. As stated by Armstrong (2000:5), “It rejects the cultural assumption that only managers are responsible for the performance of their teams and replaces it with the belief that responsibility is shared between managers and team members”. The third one claims that the core of performance management is developing individual’s potential, and after that improving organizational performance through aligning individual and organizational targets.

This essay is in favour of the third opinion, mainly because the inconsistent or missing information of target content is inevitable during the “top-down” transmission from organizational targets to individual targets. In order to make sure the staffs’ activities and outputs are congruent with organizational targets, it is widely believed that performance management should be focused on guiding and helping staffs to fulfil their tasks in the light of organizational target and requirement.

â…¢. The process of performance management

In order to ensure the targets can be accomplished effectively and punctually, managers should follow a performance management process in an orderly way. An all-around definition is provided to reflect the performance management process, as ‘a management cycle under which program performance objectives and targets are determined, managers have flexibility to achieve them, actual performance is measured , and this information feeds into decisions about programme funding, design, operations and rewards or penalties'(Curristine, 2005: 131). This section will introduce the standard Deming cycle applied in the performance management context and the Deming cycle refers to PDCA where P for plan ,D for do, C for check and A for action. During “plan” phase the goals and information are decided for employee or team. The “do” phase is for the implementation of plan and in “check” phase, supervisors will review and appraise the performance, then confirm the performance and gives feedback in the stage of “action”(Evans & Lindsay, 2008).

A. Performance planning

Performance planning is the starting point of performance management process, including three basic aspects-“setting the direction, concluding performance agreements and agreeing personal development plans”(Armstrong 2000:17-18). In other words, performance planning is deemed to be an activity of deciding what to do and how to do it. Compared to the other types of planning in traditional process and management activities, performance planning has the following characteristics:

(1). The process of performance planning is a bidirectional communication between managers and employees.

(2). All members, including managers and employees should be responsible for drawing up plans together.

B. performance implementation

Performance implementation is one of the most fundamental parts throughout the performance management. Undoubtedly, without this basic guarantee of performance implementation, plans cannot be put into practice. In essence, performance implementation is a process of delivering organizational targets or plans from managers to employees, and then people have flexibility to achieve them.

C. Performance appraisal

Performance appraisal is the focal part of performance management in which managers give assessment to individual’s work and achievements in relation to the organizational targets. A useful definition of performance appraisal is set out by the Adivory, Conciliation and Arbitration Service (ACAS) which states that: ‘appraisals regularly record an assessment of an employee’s performance, potential and development needs. The appraisal is an opportunity to take an overall view of work content, loads and volume, to look back on what has been achieved during the reporting period and agree objectives for the next'(cited in Dransfield, 2000: 71). Generally speaking, the main task of performance appraisal is to identify what the employee is to do and has it been done well. Hence, it is necessary to establish a standard for performance appraisal. If an employee’s behaviour can be in accordance with the following criteria, it is deemed that this is an effective performance: 1. Strategic Congruence, 2. Validity, 3. Reliability, 4. Acceptability, 5. Specificity (Baker, 1988).

D. Performance feedback

After being checked, individuals need to know whether their performance is good or not. So managers should provide feedback which needs to be concerned with actual performance and careful measurement. The good feedback is not simply warning employees what they have done wrong or successful, but also guiding a way for individual’s future development and improvement. This feedback information is also the evidence that human resources strategy and feedback improve leadership capability and consequently affect organizational performance (Mabey & Martin, 2001). In the practise of feedback, there are a number of methods to give feedbacks; one of the most famous systems is 360-degree feedback, which refers to a process in which employees receive confidential, anonymous feedback from the people who work around them, including managers, peers, subordinates and customers (Tyson & Ward, 2004). To sum up, performance feedback can be collected from abundant information channels, ranging from superiors to subordinates, colleagues to customers, and thereafter this feedback information will flow into decision about strategic adjustment, modification, rethinking operation and rewards or penalties.

â…£. Performance management influences the development of HRM

With the wide dissemination of performance concept, performance management has attracted intensifying attention in many organizations. Managers have placed a premium on the employees’ performance in their work. So the adoption of performance management not only can improve organizational performance, but also can be personally fulfilling and skill-enhancing. However, there are still some potential problems existing in performance management, which seems to undermine the organizational and individual development. This section will attempt to demonstrate that the functional effects of performance management are more significant than the dysfunctional.

A comprehensive definition is provided to point out the functional effects, as “In general term, we define a phenomenon as being functional if its consequences contribute positively to a larger structure” (Van Dooren, 2010: 152). Performance management thus would have functional effects when it contributes to the whole target of organization. Firstly, performance management can stimulate learning and innovation among employees and inside the organization. In terms of employees, performance management provides a motivation for encouraging employees to improve their own skills, especially those who perform poorly; they are guided to meditate deeply on their working practice, the defects in particular, which is the pivotal to the improvement of their performance. So only keep learning, can employees ensure that they can hold the job position and follow the best career path for themselves. In terms of the whole organization, performance management may trigger changes and innovation. According to De Brujin (2004), it is obvious that the yearly growth in the number of employees is steady in a company, this means that the organization accumulate slack resources who do not make any contribution to organization. The managers in department of HR can therefore adjust and improve the standard of choosing and employing persons, and cut off the overstaffed offices. Moreover, performance management can create transparency in the organization. Managers or supervisors, who are used to having a lot of priority, may commit mistakes, such as judgement errors and bias. Performance management can make their performance more visible inside or outside the organizations. It is an effective way to supervise and keep managers from giving others unfair treatment.

Despite the functional effects that performance management has, it is impossible to deny its dysfunctional effects, which can undermine the goals of the individuals and organizations. Deming (cited in Evans & Lindsay, 2008) holds the view that performance management nourishes short-term performance at the cost of the long-term planning. In order to realize the short-term interests and personal achievement, employees may make a flimsy promises to their customers and overdraw organizational resources, at last, the development of the whole organization will be blocked. What is more, the negative effects of performance management can be often caused by distortion of performance information and outputs.

In conclusion, despite the existence of drawbacks, the positive effects of performance management are more significant than the negative. Performance management is thus an evolutionary process in which individuals can obtain many opportunities for career development, such as receiving training and guiding, improving the development of capabilities, even attainment of full potential. Simultaneously, organizations can get generous profits in return from their professional performance management. It is likely that performance management will have a bright future in the department of HR.

â…¤. Conclusion

As mentioned above, this essay has discussed definitions, process and effects of performance management. It has emerged that the functional effects of performance management are more significant, despite the existence of dysfunctional effects as well. According to Hatry (2008, cited in Van Dooren 2010), performance management may not have a bright future, because some challenges remain to a certain degree and its problems are so thorny that can hinder the development of organizations. Nevertheless, now there are increasingly managers using performance management, as stated by Van Dooren (2010:175), “practitioners, management consultants as well as academics have sought solutions in response to the paradoxical and often problematic nature of performance management”. Accordingly, the foreground of performance management is still optimistic. An efficient way to solve these problems is to improve the quality of performance information, which can guarantee the reliability and equality of performance appraisal and feedback. From the aspect of employees, adequate training and skills development should be applied in the performance management. In a word, performance management is an indispensable part in the department of HR and it is to be hoped that improvements and adjustments should be taken to deal with challenges and ensure to gain the greatest returns on professional performance management.