HRM3706 Exam preparation for Performance Management.

Exam preparation for Performance Management (HRM3706) Learning Unit 1: Performance Management In Context THE SHIFT FROM PERFORMANCE ASSESSMENT TO PERFORMANCE MANAGEMENT Performance assessment was initially used for promotions, salary increases, and discipline. Origins of performance management as far back as the First World War, focusing on the period since the 1950: a decade that involved personality-based appraisal. The focus then was on evaluating performance, but with no intension of improving it. 1960: appraisal practices shifted to a greater emphasis on goal-setting and assessment of performancerelated abilities (and more recently, competences) rather than personalities. Late 1980s and the whole of the 1990: , saw organisations undergo a process of rapid and successive change. Almost inevitably, what Fletcher and Williams (1992) calls ‘performance appraisal’ became a central mechanism in a more holistic approach towards managing people and business in general. performance evaluation and performance appraisal imply a one-sided judgemental approach to performance management, where employees have limited involvement in the process. Traditional performance appraisal simply involves evaluative supervisory comments on the past performance of employees. 1990s: when performance management began to be seen as more of a core management process, growing out of its ‘appraisal’ box, and developing into an integrated, strategic and grown-up concept Explain the concept of performance management Performance management is a fundamental part of the rest of the enterprise and something recognised as contributing to the achievement of the strategic goals of the organisation. Performance management is a continuous process of identifying, measuring and developing the performance of individuals and teams and aligning performance with the strategic goals of the organisation. Two main components: • Continuous Process – Performance management is on-going. It involves a never-ending process of setting goals and objectives, observing performance and receiving on-going coaching & feedback. • Alignment with Strategic Goals – Performance management requires managers to ensure that employees’ activities and output are congruent with the organisation’s goals and consequently help the organisation gain competitive advantage. Performance therefore creates a direct link between employee performance and organisational goals and makes the employee’s contribution to the organisation explicit. Definition: Aguinis (2014:2) defines performance management as a “continuous process of identifying, measuring, and developing the performance of individual and teams, and aligning performance with the strategic goals of the organisation,” while Werner, Schuler & Jackson (2012:286) defines performance management as “a formal, structured process, used to measure, evaluate and influence employees’ jobrelated attitudes, behaviours and performance results.” Element included in definition: - is a continuous, formal and structured process - align performance with the strategic goals of the organisation - evaluate and develop employees’ job-related attitudes, behaviours and performance Performance management within an integrated human resource management (HRM) system According to werner, schuler and jackson (2012:290) performance management activities should be aligned with the organisation’s internal environment, external environment, and other hr activities; Three key issues in the internal environment 1. Organisations business strategy: performance management activities can only be effective if they are aligned with the organisation’s business strategy and the company culture in the internal environment Managers should translate the objectives of the organisation’s business strategy into specific behaviours and goals for their employees. 2. Company culture- depends on effective performance management, it can be described as a performancedriven culture, ie. share a common focus on monitoring and improving performance. 3. Technology- making it possible for employees to receive detailed information about their behaviour and performance, which can then be used in their performance development Three key issues in the external environment 1. Legal environment- laws & regulations serve as the basic principles to ensure the legality of performance management practices. protect employees against negative consequences in the workplace caused by unfair discrimination and the use of inappropriate information when making employment decisions. 2. Labour market- geographical area from which employers recruit their employees for particular jobs. Companies must compete for employees and sometimes seek them domestically, in global markets, or both. The characteristics of the labour market are unique and always changing 3. Country cultures-Different country cultures result in different HR practices & how employees relate to work environment. Performance management does not occur in a vacuum, but through interpersonal interactions. personal interactions reflect differences in country cultures Issues regarding other HR activities 1. Performance-based incentives: Performance measurement provides valuable info for use in strategic planning & organisational change, recruiting & retaining of employees, as well as performance-based pay. 2. Employee development: Performance management can reveal deficiencies that suggest the need for additional training & development performance management activities should also be aligned with other HR activities in the organisation. the use of job analysis is required in the development of fair & legally sound performance measures. Demonstrate how performance management systems are linked to other human resource activities Performance management is not a standalone process isolated from other HR activities. The information gathered through the performance management process can be linked to training, development, and workforce planning. Through performance management the development needs of employees are identified which can then be fed into the training and development initiatives of the organisation. Development plans provide information on which skills will be required in future. Recruiting and hiring decisions is also based on this information. To do workforce planning, the organisation has to compile a talent inventory, which is based on information collected through the performance management system. Demonstrate this integration by considering the relationship between performance management and training. Through performance management, information is provided on the developmental needs for employees. Organisations can use this information to utilise their training resources efficiently, because training will only be provided to employees who need training in the identified critical areas, where performance improvement is required. Performance management can also be linked to workforce planning. Information collected through the performance management system can be used in setting up the organisation’s talent inventory. Development plans provide information on what skills will be needed in the near future. This information can also be used in recruitment and hiring decisions. The relationship between performance management and compensation systems is obvious. For performance-based pay to work, there must be a strong link between rewards and performance measures, and employees must know about it Distinguish between performance management, performance appraisal and performance feedback Performance management is NOT performance appraisal. • Performance appraisal refers to a system that involves employee evaluation once a year without any effort to provide feedback and coaching so that performance can be improved. It is a systematic description of an employee’s strengths and weaknesses • Performance management is more than just evaluating employee performance. It is clear that it is an ongoing process rather than a one-off event taking place, for instance annually or biannually. It is a comprehensive, continuous and flexible approach to the management of organisations, teams and individuals which involve the maximum amount of dialogue between those concerned.  Performance Feedback involves a mutual exchange of information that both parties share, discuss and jointly assess in planning future work activities. Appraisals often put employees in a defensive position, whereas feedback is usually perceived as more neutral and a process over which employees have some control and influence. Aim and roles of performance management The performance management system can serve the following 6 purposes; 1. Strategic Purpose: Help top management achieve strategic business objectives. • By linking the organisational goals with individual goals, the PM system reinforces behaviour consistent with the attainment of organisational goals. • Communicates what the most crucial business strategic initiatives are. 2. Administrative Purpose: Furnish valid and useful information for making administrative decisions about employees. • Includes salary adjustments, promotions, employee retention or termination of service etc. • The implementation of reward systems based on information provided by the performance management system falls within the administrative purpose. 3. Informational Purpose: Important communication device. • Informs employees about how they are doing and provides them with information on specific areas where they may need improvement. • Provides information on the organisation’s and supervisor expectations and what aspects of work the supervisor believes are important. 4. Developmental Purpose: Managers can use information gathered during the PM system, feedback specifically, to coach employees and improve performance on an on-going basis. • Allows for the identification of strengths & weaknesses as well as the causes for performance deficiencies. 5. Organisational Maintenance Purpose: Provides information to be used in work force planning. • Work force planning comprises a set of systems that allow organisations to determine priorities and to allocate human resources where they can do the most good. • Important component is talent inventory, which is information on current resources. • PM systems are the primary means through which accurate talent inventories can be assembled. • Other purposes include assessing future training needs, evaluating performance achievements at organisational level and evaluating the effectiveness of HR interventions. • By managing performance the organisation can track down the talent it has and the ones it still has to search for. In the meantime the organisation should endeavour to maintain or keep what it has in its talent inventory. 6. Documentational Purpose: Allows organisations to collect useful information that can be used for several documentation purposes. • Performance data can be used to validate newly proposed selection instruments.