Performance Management at Steel Co

Individual performance is determined by the following factors:

• Motivation, the desire to do the job
• Ability, capability, know how to do the job (cognitive ability, reasoning ability, physical ability)
• Work environment, tool materials and information to do the job

The energy to perform in an organization is directly influenced by the level of motivation and the expectancy. As long as the desire to do something is present, the mount of performance output is directly proportional with the level of energy exercised. Motivation is a function of expectancy, instrumentality and valance and expectancy, is used as a tool to explain the determinants of workplace attitudes and behavior. In other words try to perform and you will succeed.

1. The Concept of valence refers to anticipated satisfaction. While value represents the actual satisfaction that a person experience from an attained outcome. Potentially a discrepancy can occur between the anticipated satisfaction from an outcome (valence) and the actual satisfaction that it provides (its value). When such disparity occurs, the reward system implemented will lead to loss of the motivational value.

2. Instrumentality represents a person’s belief about the relationship between performing an action and experiencing an outcome. The high performance is most likely to occur when both the valence and instrumentality are perceived high. It is important to understand individual’s motivational behavior by not only identifying his/hers satisfaction expected as a result of attained particular outcome, but also what actually the person thinks that he /she needs to do or not, to achieve the outcome.

3. Expectancies, representing a link between making an effort an actual performing well. It is more like motivation based on desire and effort.

Expectancy should be accompanied by specific goals setting and type of performance desired in quantitative terms. Goals should be difficult enough, to where the individual motivation will be driven by the values received from a job well done. The concept of self-efficacy is based on the individual ability to complete the task if he/she tried. Self -efficacy can increase by: emphasis on past accomplishments, observation of others, verbal persuasion (appealing to individual self image)

(McCaffery(2004) explains that a key competent of learning and development support in managing performance is guidance given by line managers to develop the knowledge or skill of their subordinates.

(McCaffery,p139(2004) believes that ‘performance management is a cyclical process centred on learning and development-not a fixed one-off event…performance management does not just happen, as is often(wrongly) assumed, at an annual event set up for the purpose. Formal appraisal is but a single process. The core foundation of performance management is learning and development.

(Armstrong, p246 (2009) believes that performance management has a vital role in an organisation, by ‘specifically helping people to appreciate the need for developing their performance and where and how it should take place,’ and ensuring that people can learn from their experience. Performance management can help people find specific courses on or off the job or by e-learning which will satisfy their learning need. But performance management’s most essential role is the help it gives to the development of a climate for learning- a ‘growth culture’. This process helps people avoid obstacles that can arise when guiding them through work challenges. It ensures that the workers have the resources and time that they need to learn, also that management can advice and support them and give feedback that is vital for them to learn.

(Foot, Cook(2008) comment on the fact that often organizations want to develop by improving performance. They want to meet their strategic objectives, or gain high-performance standards in the organization, and they wish to increase profits for shareholders, develop their market share or provide better services for their customers to avail of.

(Foot, Cook(2008) explain that in order to achieve these ideals, they need to select, recruit, motivates, develop and retain the best people for the job. (Foot, Cook, p277(2008) highlight that ‘learning and development is one of the key aspects in performance management which can help them achieve these things and it is also a key factor in managing talent.’

Individuals in an organization have the drive to improve their performance in their job, or gain new skills perhaps to get a promotion or pay increase or even move on to a more challenging and fulfilling job. (Foot,Cook(2008) believes individuals can achieve these aims with help from learning and development . Learning and development can help organizations by attracting individuals and can engage their loyalty so the organization benefits by retaining new recruits, this in turns helps the organization to optimize its current and future objectives.

(Foot,Cook(2008) emphasize the fact that learning and development has gain popularity over the past years, as organizations have realized that in order to stay competitive they need to develop and utilize the knowledge of their staff as much as possible, in order to do so they need to focus their activities from training to learning.

(Foot,Cook) continues, by saying, people learn in different ways, some of these ways can be planned others, unplanned. In order for learning to occur organizations have to ensure that they create suitable environments, so that workers can clearly benefit from the learning and knowledge of their workforce.

(Foot,Cook, p278(2008) reveals that ‘the concept of individualized learning implies that this occurs in all sorts of situations, not just in the more traditional, formal training opportunities.’ Learning and development include mentoring, coaching, job swapping and work shadowing which are less formal and are more learner centered approaches to learning.

(Wilton, p183(2013) comments how ‘in human resource development, it is important to highlight the role of learning and development in performance management and in fostering a culture of continuous improvement.’ In a firm, (Wilton(2013) explains that employee development is considered a key mechanism through which organizational performance can be improved. Learning and development provides substantial linkages within the cycle, forming part of both the evaluation or review phrase and the planning phase. (Wilton(2013) emphasizes the fact that learning and development plays a vital role in relation to remedial action to resolve performance problems.

In many organizations the HR function and the business will attempt to align individual performance to a “bell curve” of anticipated or actual required performance ratings. This approach is often positioned as being necessary to reward the highest individual performers appropriately, or to justify how the actual business and individual employee performance compares to other high performing organizations (or both).

However, when attempting to manage performance distribution across the organization the HR function is often faced with some pretty difficult questions and issues, such as, “How can we have so many high performance ratings when we aren’t achieving our organizational performance goals? Why are we paying our best performers pretty much the same as our worst performers? Are we rewarding the right people?”

What is actually happening in many organizations is that they believe they are paying for one thing (performance) when in actual fact they are paying for something else.

For example, reward for promotion often exceeds annual pay increases for performance within any given level, no matter how much the employee has contributed. Therefore, employees have a much greater incentive to try to get promoted than to stay put and do an outstanding job. This issue can be exacerbated by the use of broad band’s (grades) and salary ranges; all too often, organizations implement a new approach to pay without considering how to communicate to their employees the principles of progression within a salary range.

If we take another example, you may work in an organization which is results-oriented, and management is only interested in financial measures such as profit or revenue. Financial rewards are probably used as the major motivator for staff, as we have seen within the financial services sector. However, this approach may not be the right one for employees who are not motivated by financial reward and are perhaps already highly
committed to the goals of the organization. In this situation, non-monetary rewards may be the way to go.

For smaller organizations where promotion opportunities are limited, the opportunities for employees to reap financial rewards for moving up and for performing well are also limited.
Linking performance and reward effectively relies on a good understanding of your organizational context, and the mix of employee motivating factors.

Armstrong, Michael.(2009) Armstrong’s Handbook of Performance Management.

Clifford, Jackie, Thorpe, Sara. (2007) Advantage for your organisation.

Dam, Van Nick, Marcus, Jos, Medhurst Keith.(2007) An International Approach to Organisation and Management.

Finch, Erik(2010). A talent development approach that integrates learning and performance management is needed to retain staff. Retrieved on the 20th of March 2014.

Margaret, Foot. Cook, Caroline. (2008) Introducing Human Resource Management.

McCaffery, Peter (2004) The higher Education Manager’s Handbook; Effective leadership and Management.

Wilton, Nick (2013) An Introduction to Human Resource Management.