Literature Review on Performance Management

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CHAPTER TWO
2.0 LITERATURE REVIEW
2.1Introduction
Over the last two decades, Performance Information, its implementation and presentation to the end users which directly refers to the subject of performance measurement (PM) has gained increasing interest and recognition in the general management literature, leading Neely (1999), when referring to the many contributions on the subject, to talk about the Performance Measurement Revolution. He demonstrated that between 1994 and 1996 a mere 3615 articles on performance measurement were published. During that period, there has been a sustained attention for PM within the financial industry. This section intends to make an expository on the PM literature by explicitly considering a variety of performance measurement systems (PMSs). We look at existing systems for measuring overall business performance, and look how they could be used in the financial industry in general and CENO international bank in particular. The researcher deliberately cast his net wider than the popular Business Balanced Scorecard and its many variations and adaptations. The research aims to contribute to practice by drawing out the strengths and weaknesses of different performance measurement systems for the financial services institutions, as well as discussing the main issues relating to the implementation of performance measurement systems.

In this chapter, first of all, performance management will be defined. Then, the evolution of PMSs will be described. This is followed by a discussion of the functions and elements of an effective PMS. Then, we present five existent PMSs: the Balanced Scorecard (Kaplan, Norton, 1992), the Tableau de Bord (Epstein, Manzoni, 1998), the Performance Prism (Neely and Adams, 2000), the Performance Pyramid (Lynch, Cross, 1991), and the Productivity Measurement and Enhancement System (Pritchard, 1990).

A review of 360 degree feedback was done as well as its drawbacks. Finally, the researcher shall explore how poor performance can be managed putting into the process some ethical considerations.

2.1.1 Performance Management
A key impetus for the development and recognition of the importance of performance management has been the more competitive environment with which organisation now operate (Bach, 2005). With market globalisation and increased competition increasingly from third world countries organisations became under increasing pressure to increase productivity and reduce costs. During the 1980s a more holistic view was adopted considering all the influences on performance with a shift from simply performance measurement of outcomes to a more sophisticated performance management approach (Bach, 1998), developing a more strategic HRM approach to resource management (Marchington & Wilkinson, 2005) linking the aims of the organisation to the performance of the individual (Mwita, 2003). Performance management is a structured method of review which aims to link together individual goals, departmental purpose and organisational objectives (Marchington & Wilkinson 2007). In this there is a clear strategic link between employee behaviour and the performance of the organisation. A useful definition of performance management was provided by Verweire and Van Den Berghe (2004,p7) as a ‘..,comprehensive management process framing the continuous improvement journey by ensuring that everyone understands where the organisation is and where it needs to go to meet stakeholder needs.’ Ultimately, the goal of performance management is to achieve human capital advantage recognising that the individual is the most important source of the capital advantage to the organisation (Armstrong & Baron, 2007). This was also described by Boxall (1996) as a human resource process of ensuring that the results of recruitment strategy were to ensure that the organisation employed people with competitively valuable knowledge and skills. In this Boxall reaffirms...
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