SHORTCOMINGS OF PERFORMANCE MANAGEMENT SYSTEMS

BSMH 5023

STRATEGIC HUMAN RESOURCE MANAGEMENT

By;

PRIDHIVRAJ NAIDU - 814284

CONTENT

1.0 Introduction to Performance Management

2.0 Performance Management in use at organizations

3.0 The Shortcomings

1.0 Introduction to PM

Continues process of identifying, measuring and developing the performance of individuals and teams aligning performance with the strategic goals of the organization.

(Aguinis and Pierce, 2008)

Done by giving clear instructions and providing continues support to employees in order to work effectively and efficiently as possible to full fill the needs of the organization

(Walters, 1995).

emphasize the strategic and integrated nature of performance management, which in their view focuses on “increasing the effectiveness of organizations by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors”

(Baron and Armstrong, 1998)

2.0 PM in use at organizations

Managerial and technical employees in service organizations found that 99% had some form of performance evaluation.

(Aberdeen Group survey, 2004)

A participation rate of approximately 90%.

(Watson Wyatt survey, 2004)

In a 2003 international survey of businesses of all sizes, 59% reported using some form of performance management tool, an increase of 18% compared with a similar survey two years earlier.

In that earlier survey 75% said they intended to be using performance management systems by 2003. Progress was slower than expected, largely due to HR budget constraints.

(Meta Group, The State of Workforce Management Solutions, 2004)

2.0 PM in use at organizations (Cont.)

In a recent New Zealand survey overall 30% of managers reported they had not had a performance appraisal in the last 12 months, a percentage that was almost double in smaller organizations.

(Hudson Report Employment trends, 2004)

Almost 2/3rd of respondents reported their performance evaluation involved an interview. 48% recorded information using a paper-based system, and 17% used some form of computerized system.

(Aberdeen Group Survey, 2004)

2.0 PM in use at organizations (Cont.)

In most organizations performance management is primarily an annual event, a form completed prior to the end of the financial year.

The form is filed and in most cases will not be touched again until the next review the following year.

The performance appraisal may or may not be referred to at the annual pay review.

It is not surprising then that research consistently indicates that most performance management systems are of poor quality and poorly executed.

3.0 The Shortcomings of PM

A. Design Flaws

1. Clear Purpose

2. Alignment

3. Meaning

B. Lack of Credibility

1. Fairness

2. Commitment

3. System Integrity

(Markus, 2004)

A. Design Flows

1. Clear Purpose

Performance Management is a systematic process of;

- Planning work and setting expectations,

- Continually monitoring performance,

- Developing the capacity to perform,

- Periodically rating performance in a summary fashion,

- Rewarding good performance

(The US Office of Personnel Management, 2001)

A. Design Flows

2. Alignment

A means of ensuring the effort of every individual is aligned with the organization, that each individual understands their contribution and its importance.

This is easier said than done, often there are conflicts between departments such as operations and sales.

3. Meaning

Research shows that many decisions about career development are made on an ad hoc basis rather than on merit

(NZ State Services Commission, 2002)

B. Lack of credibility

1. Fairness

Deciding factor for the success of the performance management itself (Erdogan et.al., 2001)

Procedural

Fairness of process in achieving the outcomes (Rowland & Hall, 2012)

Distributive – Equity Theory

workers compare their own input/output ratios with that of others (Adam, 1963)

B. Lack of credibility

1. Fairness (Cont.)

Informational

communicating relevant reasons for the procedures used (Greenberg,1993)

Interpersonal

The fairness perception of the employee is generally based on the practices of the organization and the employers towards the employees themselves (Cropanzano and Greenberg, 1997)

B. Lack of credibility

2. Commitment

Commitment to performance management from all levels

Proper and regular use of the program

Integrity of the system must be monitored

Avoid internal sabotage

B. Lack of credibility

3. System Integrity

Mechanism for ensuring that the system is working

375 of the staff were evaluated correct frequency

Only 50% of firms gave training on PM

(Aberdeen Group, 2004)

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