Essay Question #2
Discuss the main issues and challenges for organisations in implementing performance management systems? What are the specific skills that managers and human resource (HR) practitioners need in order to address these issues effectively? Performance management systems can be broadly defined as the systematic approach to defining, measuring and reviewing the performance of individuals, teams and the organisation as a whole.
(Schultz, cited in Kumari & Malhotra 2012; Singh 2012). For the purpose of this analysis, the focus will be primarily on performance management of individuals. Despite the terms being commonly considered interchangeable, it is important to recognise that the performance appraisal serves as one element of the system as a whole, which is considered the formal reviewing component (Tovey, Uren & Sheldon 2010). The fundamental intention of the performance management system is to align the performance of the individual with that of the organisation thereby ensuring contribution to the explicit objectives, priorities and expectations (Biron, Farndale & Paauwe 2011; Seiden & Sowa 2011).
Designed, implemented and managed well, performance management systems have been proven to positively effect staff retention, satisfaction and competency while poorly applied systems have been linked to organisation wide negative consequences (Seiden & Sowa 2011; Pulakos, 2009). Key issues that challenge successful implementation of performance management systems are employee resistance, inaccurate assessments and lack of succession planning. A sound understanding and utilisation of Katz’s three skill components, conceptual, human and technical, prove essential in addressing these implications.
There are a number of varied opinions on the best method to manage individual performance in organisations. Ultimately, there is no one right way; any performance management system that is implemented must be congruent with the organisational culture, vision and values (Kumari & Malhotra 2012). Upon implementing a performance management system, its importance and relevance should be communicated to all levels of employees to ensure it is perceived as a constructive tool rather than another management activity and an opportunity to monitor and critique results (Seiden & Sowa 2011). Various researchers acknowledge there are three vital stages to implementing a performance management system, generally termed planning/design, the performance itself and the review/analysis (Bourne et al. 2000; Tovey, Uren & Sheldon 2010).
The first phase of a performance management system is the planning process, in which the all important performance standards are set. Effective performance standards must be specific, they must reflect the key competencies of a job role and they must be explicitly linked to organisational objectives (Tovey, Uren & Sheldon 2010). In setting performance standards, strategic organisational goals ‘should be cascaded into increasingly specific accountabilities’ to define tactical and operational goals (Clardy 2013, p. 6). To achieve optimal organisational fit, management are encouraged to identify key performance areas, develop specific indicators, devise measurement tools and methods and ascertain frequency of assessment, utilising employee involvement to ensure fair implementation and minimises stress (Singh 2012; Tovey, Uren & Sheldon 2010). Encouraging transparency and employee involvement leads to congruency of individual and organisation goals, which ensures that the strategic direction of the organisation is supported by all involved.(Becker, Antuar & Everett 2011).
The second phase of the performance management system, performance, encompasses the behaviours and activities of the individual. This phase provides the opportunity for observation, both self and management monitoring, ongoing, informal feedback and the collection of evidence by…