Today's business environment is turbulent and highly competitive. The corporate climate has swiftly transformed and become more demanding, prompting the development of a performance management system by every organization. The procedure is a critical component in the exploitation and development of a company's most important resources. Armstrong (2006) defines performance management as a strategic instrument that ensures an organization's continuous success by improving employee performance and developing the capabilities of teams and individual contributors (Armstrong 2006, p. 12). An organization can thus utilize performance management to evaluate and develop the behavior and skills of its staff, thus giving the company a competitive edge over its competitors. Additionally, this strategic process allows organizations to reward its employees, establish development and training needs, issue performance feedback to the staff, assign and assess individual employee work, set performance standards, and determine work goals. The term performance management became ubiquitous in the 21st century, which is rooted in the body of knowledge on different disciplines in the business world. The majority of successful firms apply performance management at all organizational levels (Al-Htaybat and Alberti-Alhtaybat 2013, p. 15).
Importance of Performance Management
Contrary to the widespread assumption that performance management is only essential to the employers, this strategic process is also significant to the employees. From the management perspective, it is vital to understanding how the staff contributes to the objectives of the company. An excellent performance management system not only allows the management to assess the employees’ current performance, but also enables the organization to conduct a thorough evaluation of the workers’ training needs. The company can additionally utilize the outcome of the performance management process to establish developmental plans and individual remuneration (Cardy 2003, p. 9).
From the employees' perspective, on the other hand, such management tool ensures transparency over performance at the place of work.Resourceful employees also utilize results from performance m ayers to agree on the job to be accomplished, how it will be achieved, and how to progress towards the desired results. Performance management also leads to improved productivity. The process ensures that there is an improvement in the way the staff works as well as in the outcome they generate. The positive change can be attributed to improved employee morale that has a direct impact on organizational productivity (Brudan 2010, p. 109). Performance management system is thus essential to every commercial organization. However, an organization can only reap the benefits of this strategic process when the system is implemented correctly, and specific vital factors are taken into consideration. This paper provides a critical evaluation of the factors that are to be taken into account to ensure successful implementation of the performance management system in a commercial organization.
Aligning Performance Management System with Other Human Resource Systems
It is critical for the commercial organizations to make sure the proposed system works in correspondence with the existing one, particularly in the human resource department. For instance, the competencies employed during the process of implementation should be similar to the ones needed for staffing, recruitment, and training (Mustafa 2013, p. 11). When the alignment is done, it serves to reiterate the value that an organization attached to the personnel in addition to ensuring consistency in hiring, training, and appraisal.
Engage Organizational Members
The success of the organizations’ performance management system depends on the firm’s ability to bring the employees on board. Everybody should be motivated to promote unity during the implementation. The top-level management should constantly show high level of commitment to the process to serve as an example sicnc it would lead to to high chances of success of the intended implementation (DeNisi and Kluger 2000, p. 131). In any enterprise where the Chief Executive Officer models the performance management for the employees together with the executive team, a clear path of the expectation is set, which ensures higher success, unlike the firms where the level of support is low due to the little dedication. The absence of support by the management is a prerequisite to failure. The managers thus must follow the parameters of the system and institute expectations which those who report to them follow (Weatherly 2004, p. 3). Depending on the performance culture in the organisation, it is necessary to institute the magnitude to be able to determine whether there is a need to bring the top management through thorough explanations and reasons. The firms which have established positive culture require little or no push to implement the system, unlike when the enterprise in question has low commitment.
Communication
It is also critical for the organization to communicate the launch of the design process. The designing team members are mandated to inform their respective constituents about a planned revision to the performance management system. The team is thus responsible for collecting the feedback and input on the desired characteristics and features. In case the implementation needs a significant overhaul that affects employees, then a change-management strategy is a must. For instance, the new system may create a link between the pay and the performance which may not have been in place before (Engelmann and Roesch 2001, p. 17). Such scenario may pose a threat to the workers, hence facilitating resistance or even sabotage to the project. Communication is vital to explain to the employees the rationale and importance of the new system. Ample opportunities should be provided to the organizational team members to give their view on the new system and respond to those propositions subject to which they are not addressed (Pulakos 2004, p. 9). In most cases, firms advertise marketing materials, use slogans, and organise massive campaigns to sell their new performance management system.
Automation
Since the performance management systems imply a considerable amount of exchange of documents and paperwork writing, the need for automation may be indispensable. Due to the increased administrative work, the managers and the employees may end up spending most of their allocated time in paperwork instead of focusing on the discussion of the performance development and issues (Greguras, Robie, Schleicher, and Goff 2003, p. 13). In addition to that, the work-flow of the performance management can be greatly facilitated with the automation. Such move can reduce the workload on employees, providing the widespread access to performance management technique, developing a structured approach, and introducing a standardized way of collecting and storing performance data (Engelmann and Roesch 2001, p. 13). The outcome of the automation above thus can be both welcomed by the employees and managers, and therefore, the decision on automation use should make sure there is a balance among resources, time, maintenance, costs, and development.
Pilot Test
The intended performance management system should be pilot tested. Such process should be done in a few units within the organization to establish the potential success factor or hindrance issue. It is necessary to pinpoint whether the system will work smoothly and efficiently. Additionally, it serves to show whether employees and managers understand and offer the needed support or if there is a need for additional change-management (Grote 1996, p. 19). The stage is critical in gauging the reactions to the system. Furthermore, it offers an organization a chance to make adjustment needed to facilitate the implementation of the entire business.
Training Employees and Managers
The managers and the employees should be able and motivated to employ the performance management system efficiently and effectively. In fact, only through training the set objectives can be achieved. Such training format includes job aids and classroom training. The process of selection of the efficient training format depends on the experience rather than the resources that business is willing to devote to the exercise. Everybody will pay high importance to the system change, especially where the managers and employees are engaged in classroom training or management briefing (Hillgren & Cheatham, 2000, p. 8). The adoption of classroom training highly depends on the interactive or hands-on discussions to ensure efficient feedback delivery. The classroom format is preferable because it allows both employees and managers to practice, understand, and develop comfort with the assigned role in the feedback delivery. The cost associated with classroom format thus requires its adoption only if the when the value added is considerable. On the other hand, performance aid is preferable because it can be reviewed by the workers at their own pace. In certain organizations, hotline numbers may be provided to enable employees and managers to call and post their queries about the process (Pulakos 2004, p. 12).
Evaluation and Improvement
Performance management systems need to be evaluated, and improvements should be made over time. At this stage, specific metrics need to be assessed along with the ways in which the system operates. Tracking of the completion of the training to ensure that all the users of the system have been prepared before the actual implementation of the project is essential (Hillgren and Cheatham 2000, p. 19). The completion of performance management activities should also be provided. The management review is also vital at this stage to make sure the narrative descriptions match the ratings. The scores should be justified and that the evaluation criterion is uniform across all the departments. The ranks are supposed to be discussed by units to determine the extent of success or failure of the implementation (Greguras, Robie, Schleicher, and Goff 2003, p. 6). Employees and managers at this point are awarded evaluation scores differing with regard to the job descriptions.
Legal Considerations
The organization should be well conversant with the legal and professional guidelines relating to performance implementation in any country. Looking at case laws as well as directives will make sure that the application adheres to the expectation of the community, thus leading to success. The outcome of the project will, therefore, depend on the ethical consideration of the business in place (Martin, Bartol, and Kehoe 2000, p. 400).
Limitations
The implementation of a performance management system, however, comes with some challenges. The primary restriction is often lack of integrating the process with the organizational structure and culture, human resource management systems, and strategic planning. Another problem is the absence of leadership commitment (Martin, Bartol, and Kehoe 2000, p. 382). Management is responsible for reviewing and monitoring performance across the organization. The use of the wrong design is yet another limitation. The correct model must always fit the specific needs of the firm (Engelmann and Roesch 2001, p. 21).
Conclusion
Performance management is a simple yet a very complicated process that comprises of various steps. However, this approach can yield many benefits if implemented correctly, and the key factors are taken into account. This strategic tool plays a fundamental role in the management of human resources with the objective of accomplishing organisational and employees’ goals. The performance of a company’s employees has a direct connection with its performance management system. In the modern era of competition, performance management has become an integral part of agencies and employees relationship. However, the implementation of a performance management system can only be successful if it is aligned with other human resource systems. Communication, automation, legal considerations, and pilot testing are also essential for the effectiveness of a performance management. Furthermore, a suitable performance process should engage all the organizational members, train the managers and employees, and provide a schedule for routine evaluations and improvements of the system.
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