Performance Management Effectiveness: Lessons from Worldleading Firms

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The International Journal of Human Resource Management
Publication details, including instructions for authors and subscription information: http://www.tandfonline.com/loi/rijh20

Performance management effectiveness: lessons from worldleading firms Michal Biron
a a b

, Elaine Farndale & Jaap Paauwe

b

b

Graduate School of Management, University of Haifa, Mount Carmel, Haifa, Israel b

Department of Human Resource Studies, Tilburg University, LE Tilburg, The Netherlands Available online: 30 Mar 2011

To cite this article: Michal Biron, Elaine Farndale & Jaap Paauwe (2011): Performance management effectiveness: lessons from world-leading firms, The International Journal of Human Resource Management, 22:06, 1294-1311 To link to this article: http://dx.doi.org/10.1080/09585192.2011.559100

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The International Journal of Human Resource Management, Vol. 22, No. 6, March 2011, 1294–1311

Performance management effectiveness: lessons from world-leading firms Michal Birona,b, Elaine Farndaleb* and Jaap Paauweb
b a Graduate School of Management, University of Haifa, Mount Carmel, Haifa, Israel; Department of Human Resource Studies, Tilburg University, LE Tilburg, The Netherlands

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While interest in performance management has increased considerably in recent years, research has revealed inconsistent results about its effectiveness. Inconsistencies may be related to insufficient understanding of the factors likely to enhance the effectiveness of performance management systems. The current study seeks to address this issue by investigating performance management systems in 16 world-leading firms. We use signalling theory [e.g. Spence (1973), Quarterly Journal of Economics, 87, 355– 374; Murray (1991), Journal of Marketing, 55, 10 – 25] to propose that to the extent that firms promote certain facilitating practices, employees infer that management is concerned with performance management issues, and this may have a trickle-down effect with regard to the effectiveness of the firm’s performance management system. Our framework proposes four performance management system facilitators, which include (1) taking a broad view of performance management that includes both strategic and tactical elements; (2) involving senior managers in the process; (3) clearly communicating performance expectations and (4) formally training performance raters. Keywords: communication; performance management; performance measurement; senior management involvement; training

Introduction Performance management refers to a range of activities engaged in by organisations to enhance the performance of individuals and units, with the ultimate purpose of improving organisational effectiveness (DeNisi 2000). Activities that fit within this definition are, for example, the setting of corporate, departmental, team, and individual objectives, and the use of appraisal systems, reward strategies, training schemes and individual career plans (Roberts 2001). The overall goal of performance management is, therefore, to ensure that the...
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