Management Essays – Performance Management and Organizational Success

Employee Performance Management and Organizational Success

The achievement of organizational goals requires a sensible balance between managerial commitment to the strategic interests of a business and to the human interests of its everyday operation at every level. Indeed, research and experiential evidence will tend to demonstrate that there is a symbiotic relationship between these aspects of organizational orientation which suggests that effective strategy must inherently consider the implications of the experience of the personnel who will implement said strategy. Therefore, we enter into this discussion under the assumptive basis that an organization’s performance success will be inherently based on the performance effectiveness of its personnel. In relation, organizational management must therefore be devoted in a large part to the administration of performance in personnel, through such varied measures as the reconsideration of the factors which are typically used to evaluate organizational performance, the setting of benchmarks for employee performance, the consideration of metrics for assessment of employee and team performances and the overall shift from financial models of management to employee-centered strategies.

It is important for an organization attempting to evaluate its own performance to consider a wide range of factors. Though financial indicators are often used to evaluate performance, there is evidence that these indicators result in what is called a lagging outcome, where companies rely incorrectly on economic factors from the past to make decisions about the present and the future. (Rodrigue, 1) Instead, a more effective evaluation strategy should include performance indicators for organizational qualities that produce these financial indicators. Most specifically, by better understanding the implications of such factors as personnel performance and the managerial oversight of such operational performance, it is distinctly possible to create a more relevant way to motivate and measure performance than the typically outdated ways of financial measurement and singular financial incentive. Indeed, this is reinforced by current and predominant research, which contends that “the conceptual and empirical work relevant to this question has progressed far enough to suggest that the role of human resources can be crucial.” (Becker et al, 779)

Much of our discussion regarded employee performance management centered on the changing nature of business today, within which companies “must continually improve their performance by reducing costs, innovating products and processes, and improving quality, productivity, and speed to market.” (Becker, 770) By considering each of these a function of employee performance, organizational management can direct its attention to evolving its operational capacity through personnel.

Certainly, today, businesses are often too complex or segmented, their industries too competitive and diversified, to be understood simply in terms of financial balance or the achievement of strictly external market benchmarks. Traditional markers of company success, or of the success of individual performers in a company, have been understood in terms of the proportion between what an employee or department earns and what it costs. (Marchington et al, 81) However, it is increasingly apparent that such strictly quantitative perspectives tend to cast too modest a net in attempting to wrangle an understanding of true performance values. When properly understood, many organizations are today recognizing, performance values will be measured by a wide array of factors, but will be primarily dependent upon the management of personnel performances individually and in team contexts. To this extent, companies must genuinely consider with an importance of equal or greater consequence such factors as customer satisfaction, process efficiency and innovation when coming to an understanding of personnel performance realities. These factors will supplement an organization’s understanding of financial figures, helping to better interpret the meaning of otherwise potentially misleading or untimely numbers. (Rodrigue et al, 1) Though many of these factors appear as somewhat abstract when compared to cold hard financial numbers, they are in fact measurable today by way of technological methods that have helped to fuel something of a revolution in organizational orientation.

Software solutions which can help organizations to properly conceptualize, frame and understand performance metrics other than those concerning dollar amounts are becoming increasingly common and affordable. A 2002 study from the Singapore Management Review provides the specific example of software company integration of IT based performance management solutions which dictates that there is a distinct benefit to integrating at a high level of importance metrics concerning personnel into an overall understanding of the management scheme. (Buch et al, 21) Such IT solutions can help organizations to set benchmarks and to measure the extent to which such benchmarks are met by individuals, departments and the organization as a whole.
Though much of this discussion centers on how changes in the global economic scheme have in fact strengthened the correlation between employee performance and overall organizational performance, important examples come to us from the twin histories of industrial development and the discourse on its psychological effects. One such example comes to us from Bethlehem Steel, the 19^th and early 20^th magnate of industrial development. Here, a highly regarded organizational theorist named Frederick Winslow Thomas began to observe the values in distributing labor according to performance indicators as a means to improving overall business functionality. In its embryonic stages, Scientific Management Theory began to show in Taylor’s principled reconsideration of labor division. By beginning to designate tasks according to the individual strengths of laborers, by equipping the right laborers with the optimal supplies, by motivating workers with financial incentives relating to individual efficiency and by providing all workers and tasks with explicit guidelines to be induced during labor training periods, Taylor forever changed the face of industrial labor. These developments would prove remarkably effective at Bethlehem. They were so effective, in fact, that they had the impact of reducing its labor population by three-quarters of its former size. (Papesh, 2) In consideration of the history of organizational psychology, we can begin to see that the investigation of performance behaviors by laborers was not necessary a benign process.

Still, we can see that when the formulation of such an approach to achieving success is channeled through a more conscientious dialogue with personnel at subdivisions of management and at all levels of labor, there is great promise for organizational success. McDonalds is, it would seem, an organization which has begun to reorient itself in the 21^st century toward people management theories rather than through product or marketing emphases. This is a transition which engages McDonald’s franchises throughout the global network, demonstrating that Taylor’s theories would be prescient in their potential for application to the era of globalization.

Under its current adaptation, McDonald’s is attempting to achieve a system where it uses multidirectional channels of communication to achieving nuanced metrics and priorities for performance emphases. Its current HR manager describes the process, noting that “human resources managers in various countries submit their business cases and targets in the second half of the year to senior executives for approval. At the end of the year, the country’s annual incentive pool is based on how the region met its targets as well as on the business unit’s operating income. A portion of individual employees’ annual bonuses is based on that mix.” (Marquez, 1)

The premise in operation at McDonald’s, and in many contexts throughout the changing organizational horizon is that the quality of an organization’s project will only be as good as the performances which are dedicated to its completion. Thus, it is central that proper oversight and leadership acknowledge individual and group performance markers in order to properly interpret the ongoing effectiveness of meeting a project’s goals.

A crucial and preemptive approach to ensuring that project contributors are meeting performance expectations is to provide in advance all such contributors with benchmarks of achievement and to provide them with distinctive offers of financial incentive, organizational advancement, more prominent stakeholding or some other level of recognition of performance achievement. This way, individuals are made aware of concrete and easily definable responsibilities and the positive prospects associated with effective or exceptional performance of these responsbilities. “The importance of establishing baseline measurement” is both instrumental to maintaining a gauge for performance quality and to ensuring that project contributors know how to read and respond to this gauge. (TSG, 1)

The reference here to benchmarks concerns a subject often referred to as metrics, in which companies must develop sufficient instruments to gauge employee performance as well as to relate this performance to the goals and practices of the larger organization. By creating metrics for individual and team performance, or by quantifying the interactive dynamic of staff members, the development of benchmark based instruments may help to provide an objective context of evaluating methods of communication, relationships of collaboration and other such distinctly human factors relating to project completion. Though more abstract in some ways, as we have discussed, than strictly financial ways of evaluating a company, such metrics can nonetheless be astutely employed in order to assess the effectiveness of personnel management within the parameters of an organization’s goals and measures of success.

More enterprise-centered metrics, while larger in importance than units of measurement for immediate and individual projects, will nevertheless be imperative to understanding the macro-level conditions facing such projects. Used to better understand the overall functionality, effectiveness and long-term viability of the organization, a meaningful enterprise metric will be malleable to the evolving conditions of the organization, thus serving as an important point of reference for maintaining ergonomic effectiveness across a variant of projects. The primary intent should be to find empirical ways to demonstrate and interconnectedness between findings in the enterprise-based evaluations and those in personnel findings. This anticipated adaptive method for configuring the points by which an organization measures its efficiency and functionality is known as ‘continuous design’ and is distinguished by its appeal to a diverse spectrum of sources for its developmental data. (Thomas, 1) Consultations with all levels of personnel will significantly expand upon the validity of the information which informs the creation of such metrics. In order for leadership to meaningfully institute performance achievement barometers, such must be designed with the input of those experiencing the organization at all tiers.

It is also important to tailor performance evaluation strategies to individual strengths and abilities. As such, proper performance monitoring will be stimulated by close interaction between management and those under consideration, with a project’s advancement hinging on proper exploitation of talents and virtues. Again, referring to the example in operation at McDonald’s, we can see that a feedback relationship between personnel at all levels is a crucial success factor.

In order to accomplish this, employees should be consulted in private one-on-one sessions with Human Resources, in which “an open dialogue should occur which allows the exchange of performance oriented information.” (OHR, 1) This approach should have a positive reciprocal effect of bringing to the surface the abilities and shortcomings of individuals while simultaneously offering them feedback on the administrative perceptions of such strengths and weaknesses. By ensuring that employees are aware of and engaged in the process of their own evaluation, an organization may ensure that such is a mutually beneficial process.

The move toward the use of a wider range of metrics in understanding company conditions as well as a general focus on performance management as a means to improving the achievement of organizational goals represents a positive transition in corporate orientation. By diverting attention from a singular focus on profitability, it is likely that organizations will begin to achieve higher marks in categories that are more beneficial to the consumer, to the bottom line and to the personnel involved at every level.

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