Although it is a concept that has commanded attention from the management world over the past twenty years, and has contributed to the efficiency and effectiveness of numerous organisations, yet performance measurement remains a critical and much debated issue. Most of the criticisms are directed to the performance appraisal process. Some call it useless and some even said it makes organisations worst (Bacal 1994, Deming 1986). However, these arguments against performance management were made a long time ago, with some more than twenty years ago. With the advance in technology and globalisation, who is to say that performance management has not improved? In the later chapters, we will take a look at the evolution of performance management to find out its beginnings and influences from earlier management theories. Through this essay, we will discover that performance management today is not just about appraisals, but is a developing process that serves to facilitate communication, efficiency, effectiveness and attaining both long and short-term goals.
According to Bacal (1999), performance management is a continuous communication process between employees and managers to develop a clear understanding of aligning organisational goals with personal efforts to improve both employees’ and organisation’s performance. To understand how this works, Lucas et al (2006) broke down the process into three parts: objective-setting, performing and developing, and performance review. Several activities are conducted for each part of the process, it is important that all parts are carried out for the process to be effective. Figure 1.1 presents the critical parts and activities of the performance management process. Figure 1.1 Performance Management Process, Adapted from Lucas et al (2006).
The first part of the performance management process is objective-setting. In this part of the process, there are two fundamentals that employees should be clear about: (i) the organisation’s mission and strategic goals and (ii) the job description. Employees and managers would come together to negotiate a performance agreement, as according to Armstrong and Baron (2005), are the expectations that are discussed and agreed upon between employee and managers; the objectives that need to be achieved, how performance are evaluated, and the skills that are required to deliver. Shields (2007) stressed the importance for employees to be educated on how to set accurate and meaningful goals and expectations which needs to be valid, reliable and self-regulated. Figure 1.2 shows the ‘SMART’ method of goal-setting. Figure 1.2 ‘SMART’ Goal-setting, Shields (2007)
SSpecific and Stretching
Clear, unambiguous, straightforward, understandable, challenging. MMeasurable and able to be Monitored
Related to valid quantifiable measures (KPI) that will allow progress to be tracked during the performance cycle. AAgreed and Accepted
A target that the employee has co-determined which he/she feels a sense of ownership. RRealistic and Representative
Challenging but position-valid and within the capabilities of the individual. TTimely
Achievable within the defined time scale with progress subjected to continuous feedback.
When the employee is clear about his job scope and expectations, has complete understanding of the organisation’s purpose and the goals it strives to achieve, he knows what to do to efficiently help the organisation achieve its goals (Smither 2009). In the second part of the process, managers would observe his employees to ensure that performance is satisfactory and coherent with the performance agreement. Cardy and Leonard (2011) adds that when managers identify performance or behavioural issues, they will work with the employee to develop a performance improvement plan where managers will provide ongoing consultation, coaching, counselling and performance feedback to help employees receive clear...