Performance management is a core business process (Hartle, 1997) that attracts an ever-growing amount of attention (Haligan, 2010). Its primary objective is to obtain the best performance from individual employees and teams in an organisation as well as improve the overall performance of the business. Hence, effective performance management involves sharing the same objectives, setting goals and targets that need to be achieved and then effectively managing, coaching, motivating, evaluating and developing employees in a way that allows such shared goals to be consistently met in an effective and efficient manner (Dransfield, 2000). There is no precise agreement of what a perfect performance management programme should involve. Nevertheless, the most commonly used elements are: clear corporate strategy, SMART goals, effective performance appraisal, performance-based pay and regular management review (Winfield, 2004). A number of actions can arise as a result of the performance review, such as new employee development plan, the allocation of performance-related pay or bonuses as well as a career progression (Bacal, 2004). The beginning of managing individual and team performance in a holistic way dates back to the 1980s (Armstrong, 2005a) and nowadays the system of managing performance in a continuous way is widely used in some form or other in most organisations (Gooier, 2000). However, as noted by Armstrong (2009) instead of being praised, performance management has attracted a lot of criticism from both scholars as well as practitioners. As claimed by Winstanley (2000), when it comes to motivational aspect and technical effectiveness performance management is one of the most heavily criticised human resource management practises. And Grint (1993 in Redman, 2009, p.186) even states that “rarely in the history of business can such a system have promised so much and delivered so little”. The critics of performance management are divided into two groups. Most practitioners and some academics claim that the idea behind performance management is good but in reality it does not bring expected results. Another group that consists mainly of academics is of the opinion that performance management initiative is bad and it simply does not work. The academic critique of performance management paradigm can be discussed from different angles. Winstanley (2000) identifies three main critical approaches to performance management, functionalists, radical and humanistic as a basis for a debate. The functionalist critique of performance management is classified under three headings: problem in operationalisation, subjectivity and bias, performance management and effectiveness. As far as problems in operationalisation are concerned, performance objectives ought to be SMART- Specific, Measurable, Achievable, Realistic and Time-bound (Robertson, 2007). Nonetheless, as argued by the functionalists, in practise performance objectives and organisational goals are hard to design and agree upon. They are notoriously difficult to apply to the whole of an employee’s job and may lack flexibility when it comes to responding to changes (Torrington, 2009). Other criticisms relate to the problem of appraisal itself. Opponents of performance management argue that the problems with the system are very often caused by the over-bureaucratisation of the process. Another reason for the status quo is the lack of time and devotion to the process that is often seen as unimportant. Line managers are mostly to blame as they are reluctant to get actively involved and they do not perform their duties well. Moreover, in most cases too much emphasis is put on rewards rather than employee development (Collings, 2009).
As concerns subjectivity and bias, unfairness has led to loss of confidence in the effectiveness of performance management in many organisations (Elegbe, 2010). Winstanley (2000) divides unfairness into two...
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