Effectiveness of Performance Management System for Employee Performance Through Engagement
Performance management system effectiveness (PMSE) is the measure of alignment between employee and organizational objectives (Armstrong, 2015). An effective performance management system implementation process necessitates that employees eagerly accept and effectively participate in the goal-setting process (Kennerley & Neely, 2003). The exploration of PMSE in terms of its impact on employees’ motivation, work engagement, performance, and retention (Audenaert, M., Decramer, A., George, B., Verschuere, B., & Van Waeyenberg, T., 2019)
Lawler (2003) found certain design factors responsible for PMSE:
- Ongoing feedback, use of behaviour-based measures, preset goals,
- Trained raters, and equitable rewards.
However, his study considered and used items pertaining to performance appraisal effectiveness (PAE) in terms of its relationship with different reward practices.
Broadbent and Laughlin (2009) add that the concept of PMSE is also dependent on the context that varies based on history, purpose, technology, people, and environment of the organization. It is, thus, equally important to understand that the organizational structures, culture, and performance of organizations in developing countries are different from the developed world, and therefore, may have varied effects on PMSE.
Teeroovengadum, V., Nunkoo, R., & Dulloo, H. (2019) investigate PMSE from three types of organizational purposes—strategic, development, and administrative. Similarly, in another study, Lappalainen (2019) indicate that PMSE serves two main functions, judgmental and developmental. The first one is evaluative and helps make administrative decisions about employees, whereas the developmental part is related to its potential for high performance.
The interplay between individual and organizational control has recently shifted from technical to social mechanisms, where the technicality of control and command is concerned with a structural and bureaucratic trend to cultural, and behavioural aspects leading to organizational outcomes (Smith & Bititci, 2017). Work engagement as one of the behavioural aspects is a possible consequence of PMSE (Alarcon & Edwards, 2011). The reliance of contemporary organizations on performance management systems can only be achieved if they focus more on proximal outcomes like employee performance through work engagement (Buchner, 2007). Mone and London (2010) also suggest that an effective PMS can help in the creation and sustenance of a high level of employee work engagement leading to better performance.
Saratun (2016) recommends that future research and practice should start considering the objective of an effective performance management process by including engagement, which has not received its due attention in the past. He further indicates that a specific concept of “self” constructed PM and psychological capital proves interesting and provides useful opportunities for both. He further contends that previous research has not studied this relationship, especially with PMSE but in most cases, PMS along with organizational justice were taken as parts of other managerial processes.
The below video presented by Darren Stevenson, Managing Director of Extend Academy, speaks on 5 steps of effective performance management
1. Customers service and how to deliver your expectations clearly
2. Assign a task which could be measurable
3. Track the progress and measure the results
4. Position reinforcement
5. Document the progress and assign a task that the employee is more passionate about.
Video 01 - 5 steps of Effective Performance Management
- Audenaert, M., Decramer, A., George, B., Verschuere, B., & Van Waeyenberg, T. 2019. “When employee performance management affects individual innovation in public organizations”: The role of consistency and LMX. The International Journal of Human Resource Management, 30(5), p. 815–34
- Alarcon, G. M., & Edwards, J. E. 2011, “The relationship of engagement, job satisfaction and turnover intentions”, Stress and Health, 27(3), p. 294-98
- Broadbent, J., & Laughlin, R. 2009, “Performance management systems”, A conceptual model. Management Accounting Research, 20, p. 283-95
Buchner, T. W. 2007, “Performance management theory”, A look from the performer’s perspective with implications for HRD. Human Resource Development International, 10(1), p. 59-73
Darren Stevenson, Managing Director of Extend Academy, discusses 5 steps on Effective Performance Management, in an online video, viewed on 13th November 2022. (https://www.youtube.com/watch?v=Bx16Cg8PmP4&t)
Kennerley, M., & Neely, A. 2003, “Measuring performance in a changing business environment”, International Journal of Operations and Production Management, 23(2), p. 213-19
Lappalainen, P., Saunila, M., Ukko, J., Rantala, T., & Rantanen, H. 2019, “Managing performance through employee attributes”, Implications for employee engagement. International Journal of Productivity and Performance Management. Advanced online publication. https://doi.org/10.1108/IJPPM-10-2018-0356 viewed on 15th November 2022
Lawler, E. E. 2003, “Reward practices and performance management system effectiveness”, Organizational Dynamics, 32, p. 396–404.
Mone, E. M., & London, M. 2010, “Employee engagement through effective performance management”, A manager’s guide. New York
Saratun, M. 2016, “Performance management to enhance employee engagement for corporate sustainability”, Asia-Pacific Journal of Business Administration, 8(1), p. 84-102
Smith, M., & Bititci, U. 2017, “Interplay between performance measurement and management, employee engagement and performance:, International Journal of Operations & Production Management, 37(9), p. 1207-28
Teeroovengadum, V., Nunkoo, R., & Dulloo, H. 2019, “Influence of organizational factors on the effectiveness of performance management systems in the public sector”, European Business Review, 31(3), p. 447-66
Agreed with the shared content. According to the article of (Naeem and Ahmad, 2022), In January 2015, after the usual performance appraisal cycle had already started, the president and CEO of Mobilink convened a meeting with the HR team to discuss critical concerns relating to the company's performance rating system, The misalignment of organizational goals with employee goals was one such problem, Since the business did not achieve its anticipated revenue growth targets, it was necessary to emphasize the connection between individual and organizational performance, Nonetheless, many employees received wage increases, bonuses, and promotions, then the CEO of Mobilink and the HR team agreed that there was a need for changes in the existing performance appraisal system to bring employee objectives in line with organizational objectives (Naeem and Ahmad, 2022).
ReplyDeleteThank you Ann for that usual content. In a similar vein, Cardy & Dobbins (1994) discussed the relationships between concepts from research on efficient production systems and Total Quality Management (TQM) and performance appraisal. They noted that performance is determined by both the behavior of the individual and the system in which he or she functions. Likewise, Waldman (1994) suggested an integration of TQM principles with performance appraisal/management and noted that an adequate theory of performance should contain both person and system components.
DeleteHi Derrick, Great Post !! A positive PMS enhances employee job engagement and that people who are comfortable at work are more driven to perform well (Smith & Bititci, 2017). Companies with greater levels of employee engagement also creates a more positive culture of work, dedication, and drive (Harter et al.,2002). Furthermore, there is a connection between PMS and corporate sustainability is facilitated by employee performance involvement, but do not consider how employee performance serves as a middle result between work engagement and other outcomes of the connection (Saratun,2016).
ReplyDeleteHi Romeda, Performance management (PM) is widely advocated as a way to develop employees (Aguinis, 2013; Cascio, 2014). Broadly speaking, PM can be defined as “identifying, measuring, and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization” (Aguinis, 2013). This simple definition underscores the close alignment between PM practices and Human Resource Development (HRD) (Hamlin and Stewart, 2011). This link is further evidenced in which they proposed four core purposes of HRD: “improving individual or group effectiveness and performance”; “improving organizational effectiveness and performance”; “developing knowledge, skills and competencies”; and “enhancing human potential and personal growth.” (Hamlin and Stewart, 2011).
Deletegreat work william, Performance management is a deliberate and integrated approach that helps organizations succeed over the long term by enhancing employee performance and building team and individual contributor capabilities (Michael Armstrong, 2000).
ReplyDeleteOrganizational engagement can be developed through high-involvement management – a term first used by Lawler (1986) to describe management systems based on commitment and involvement, as opposed to the old bureaucratic model based on control. The underlying hypothesis is that employees will increase their involvement with the company if they are given the opportunity to manage and understand their work. Lawler claimed that high-involvement practices worked well because they acted as a synergy and had a multiplicative effect.
DeleteGreat article .PMS is as a strategic and organizational approach, which describes, evaluates, executes, and improves organizational performance constantly. It comprises of methodologies, framework, and indication that facilitate organization in the formulation of their strategy and make possible for employees to gain strategic insight, which permits them to face strategic assumptions, improve strategic thinking, and inform strategic decision-making and learning (Marr, 2006). It is seen as an integrated process in which manager work with their employees to set expectations
ReplyDeleteThank you for your comments. However, It sounds like a good idea to adopt an integrated approach to workforce and business planning but it won’t work well if business plans are volatile, vague, misleading or nonexistent, as they easily can be. Beardwell (2007) commented that HR plans should be treated as ‘tentative, flexible, and reviewed and modified on a regular basis’. Cappelli (2009) noted that: ‘The competitive environment for businesses is so changeable, and firms adjust their own strategies and practices so frequently that these estimates [of the demand for talent] are rarely accurate and they get much worse the farther out one goes.’
DeleteDerrick there is strong combination PMS and Employee Engagement.(Michelle Govender, 2020) Stated that employees become more involved and engaged when they know that their contribution is adding value and creating positive change for the organization. Empowerment is the result of increased employee engagement. All of these authors agree that empowered employees improve organizational performance.
ReplyDeleteAs defined by Benson (2006): ‘Highinvolvement work practices are a specific set of human resource practices that focus on employee decision-making, power, access to information, training and incentives.’ Camps and Luna-Arocas (2009) observed that: ‘High-involvement work practices aim to provide employees with the opportunity, skills and motivation to contribute to organizational success in environments demanding greater levels of commitment and involvement.’ The term ‘high involvement’ was used by Lawler (1986) to describe management systems based on commitment and involvement, as opposed to the old bureaucratic model based on control.
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ReplyDeleteGreat article Derrick, The approach of performance management vindicates the organization’s effectiveness (Cardy, 2004). This umbrella term highlights how work is accomplished, citing the “Achilles Heel” of managing human capital (Pulakos, 2009), concentrating the top priority of managers (Lowel,2009). Moreover, performance management encircles all organizational strategies, and practices and strengthens the organization.
ReplyDeleteThank you for that useful content. As stated by Boselie (2005) to the causal distance between an HRM input and an output such as financial performance: ‘Put simply, so many variables and events, both internal and external, affect organizations that this direct linkage strains credibility.’ Another problem is the assumption some people make that correlations indicate causality – if variable A is associated with variable B then A has caused B. It might, but again it might not. This is linked to the issue of ‘reversed causality’ which is the assumption, as Purcell et al (2003) put it, ‘that more HR practices leads to higher economic return when it just as possible that it is successful fi rms that can afford more extensive (and expensive) HRM practices’. They also comment that when successful fi rms invest heavily in HRM they may do so to help sustain high performance.
DeleteInteresting content Derrick. Adding more on this, Many organizations tend to review performance only when it goes wrong, or at the annual appraisal. However, having ongoing (perhaps weekly) meetings with a supervisor can be a helpful way of reviewing scheduled work, dealing with problems such as overload, under performance, sorting out queries, plus receiving mentoring or coaching. This frequent content can also nip problems in the bud, and prevent them becoming major issues (Margret 2022).
ReplyDeleteThank you for your comment. The whole performance review session may be dominated by the fact that it will end with a rating, thus severely limiting the forward-looking and developmental focus of the meeting, which is all important. This is particularly the case if the rating governs performance- or contribution-pay increases. Another problem is that managers may inflate ratings to avoid confrontation with the individuals concerned. Some organizations (8 per cent of the respondents to the performance management survey conducted by Armstrong and Baron (2004)) attempted to counter this by using forced distribution, which requires conforming to a laid down distribution of ratings between different levels, for example, A = 5 per cent, B = 15 per cent, C = 60 per cent, D = 15 per cent and E = 5 per cent. This achieves the consistency of a sort but managers and staff rightly resent being forced into this sort of straitjacket.
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