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Aims of the chapter

To describe the relevance and development ofperformance management

To define performance management and describe its

application as a management intervention for improvingorganizational performance

To understand the role of HRM in managing performance

To explain the theoretical contribution towards the

development of performance management as anintervention

To explore contemporary issues and consider the futureof performance management.

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Meaning of performance management

Managing performance (performance management) is

about individuals, groups and organizations achieving

something that is desirable or intended as a

consequence of their actions, which leads to

improvement and is invariably associated with

effectiveness and efficiency.

Put simply as managing the business.

(Mohrman and Mohrman, 1995)

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Growth of performance management

Globalisation

Competition

Shareholder and stakeholder expectations

Intervention for managing improvement

Private, public and third sector organizations.

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Performance management and HRM

Performance is a people outcome

Managing performance is in the HRM domain

HRM models link HR practice with performance

Performance related to work practices

HRM and line managers share responsibility.

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Performance management in practice

Performance management methods or tools

Foundations in motivational theory, systems andoperational management

Performance management systems link individualperformance with the organization, e.g. MBO andBalanced Scorecard

Organizational aims cascaded and translated into

individual goals and targets, often linked to incentives Appraisal used as a key process to manage

performance in many organizations.

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Performance appraisal

A common method of performance management andthe main intervention (management practice) forformally managing performance

Performance review (looking back), feedback,development (looking forward) and improvement

Communication, development and motivation

Objectives, measures and outcomes

Use of reliable information as a basis for rational(unbiased) discussion and decision making.

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Values, Attitudes and Behaviour (VAB)

Performance is an outcome of the choices peoplemake about how they behave, i.e. discretionarybehaviour (Purcell et al, 2003)

Organizations seek desirable behaviour in employees,

i.e. behaviour that leads to good performanceoutcomes which help achieve business aims

Values and attitudes motivate individual (and group)decisions about behaviour in work, influencingperformance outcomes

Organizations attempt to align employee VABs withtheir own in recruitment, selection, development,performance management, career progression andrewards, i.e. by managing performance.

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Contemporary issues in performance

management

Human Capital Management (HCM): attempts toquantify the value and contribution of people inorganizations can this be quantified?

HCM applies performance management methodsbased on measurement (metrics) what to measure?

Governance: managing and reporting on performanceis a key element of effective governance

Should organizations be made to manage and reporton performance to a greater extent, i.e. continue toadopt best practice on a discretionary basis or moreregulation?

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The future of managing performance?

A question of convergence or divergence

Direction will be influenced by forcing factors

How will continuing globalisation and deregulation ofmarkets influence the business and economiclandscape?

How will social and environmental pressures influence

business legislation and how organisations function? Best practice and regulation will lead to a conformity

and convergence conditions for stagnation orinnovation?

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Summary questions

1. Why is performance management relevant toemployers and employees?

2. How might an employees perception of performancemanagement differ from their employers?

3. How do HR managers contribute to the performanceof organizations?

4. What is the purpose of a performance management

system?

5. Critically evaluate the performance appraisal as aneffective management intervention to improveemployee performance.