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Of all the human resource management (HRM) functions,performance management is often perceived as the most complex,difficult, most time-consuming, and most threatening activity for managers, as it involves complex (and sometimes) dynamic qualitative and quantitative productivity measures; heightened employee and manager emotions; carefully articulated links to subsequent training, development and/or disciplinary procedures; and convoluted organisational record-keeping and recording systems. However, it is also perhaps the most important HRM function, given its potential to enhance productivity; to complement employee satisfaction; to nurture harmonious relationships between employees, their managers and work teams; and to link individual and organisational outputs and outcomes.
So, what can be done to more effectively and efficiently achieve these desirable outcomes without the time, costs and pain often associated with performance management? What are the best practice organisations doing in this regard?
First of all, do you need a performance management system (PMS)? Are there better alternatives?
Yes, and no. Without a PMS, how will you know whether individual employees are performing their jobs to desired standards, and perhaps more importantly, whether the outcomes of their work groups or teams are contributing to organisational goals and objectives? Also, if you don’t measure performance in some way, how can good performance be recognised and rewarded?
There are many types of PMS, some which are formal annual rituals, and essentially punitive in their focus; others which are less formal and aim to identify performance deficits and provide appropriate remedial opportunities; whilst many (especially in small and medium organisations) are essentially informal, on-the-job systems which involve supervisors and their staff in ongoing performance enhancement programs. Anecdotal evidence suggests that the third approach is not only more effective and more inclusive than the other two types, is less threatening and reinforces positive work cultures, and is more time efficient. What are the features of a holistic PMS? In my opinion, performance management reflects an ongoing relationship between supervisors and their staff which has both inputs and outputs. Its ultimate aims are to identify the performance requirements of particular jobs and their work groups, and to ensure that these are met effectively and efficiently, and integrated with the overall performance objectives of the organisation – as one HRM professional expressed it, ‘a more transparent and less rigid framework will increase accountability, influence retention and engagement and have a positive effect on culture’ (Robertson 2017: 22).
Inputs include clear job descriptions and associated performance criteria; transparent communication to both supervisors and staff about the purposes, processes and outcomes of the PMS; and effective training for supervisors on aspects such as performance review techniques and skills, mentoring, problem-solving and performance improvement mechanisms. Whilst these activities might appear time-consuming, the longer-term return on investment from attention to such details will normally far outweigh their initial costs and result in a more satisfied, productive and engaged workforce.
PMS outputs may include (but not be restricted to) remedial employee training and development programs, future career opportunities, increased monetary and non-monetary rewards, and key (aggregated) performance data which can be used by HRM professionals to identify systemic performance problems and subsequently to develop appropriate remedial strategies. Again, whilst these activities might seem onerous, time-consuming or costly, longer-term benefits will undoubtedly justify an organisation’s investment in such human capital development. Nor do these activities need to be overly-complex – job descriptions and performance criteria can be relatively easily designed, in conjunction with incoming employees; communication about the PMS can be included in employee intranets, as well as directly by supervisors; supervisor and employee training can also be online-based. Career opportunities, potential rewards and incentives are similarly relatively easy to consider in ongoing and informal review sessions.
Whilst complex performance management techniques such as 360-degree reviews may be valuable in the case of senior managers; most organisations can use a combination of ongoing supervisor-employee discussions, self-review, peer review, team and work-group appraisals, as effective and timely performance feedback and development mechanisms. It is also now relatively common to replace standardised PMS across organisations with diverse localised systems, with emphases on simplicity, engaged employees and their work teams, and intranet-based data collection. Most of these are relatively cost- and time-effective, and have the potential to reinforce positive organisational cultures.
Common features of modern PMS include more (and more frequent) informal performance reviews and feedback, ‘always on’ online employee learning opportunities, team (rather than individual) reviews, and a performance developmental focus, Companies such as Google, GM, Cisco and Adidas are leading the transformation of PMS (Sloan et al 2017).
Professor Alan R Nankervis
Professor of Human Resource Management in the School of Management, Curtin Business School, Curtin University, Australia
Alan has more than thirty years’ academic experience at three universities in Australia, and in the UK, Canada, Malaysia, Indonesia, Singapore and Thailand, together with consultancies in Indonesia, China and Thailand. He was the Director of the Sydney Graduate School of Management, Research Director and Head of HRM at Curtin University. He is currently the Chair of the Australian Human Resources Institute’s (AHRI) National Program Accreditation Committee.
Alan has published more than 150 books, book chapters, international journal articles and conference papers for publishers such as Routledge, Palgrave Macmillan, Cambridge University Press, Pearson Education and Cengage Learning; and journals including Personnel Review, Thunderbird International Business Review, Asia Pacific Business Review and Asia Pacific Journal of Human Resources. His research interests include the links between performance review and firm performance, comparative Asian HRM/Management, services management, and skills development in the Asia Pacific.
Alan’s most recent book is New Models of HRM in the Asia Pacific (Routledge), co-authored with Professors Malcolm Warner (Cambridge University), Fang Lee Cooke (Monash University) and Samir Chattejee (Curtin University).
Disclaimer: The thoughts and opinions expressed here are those by the contributors alone and do not represent the views of any other organisation, the forum moderator or that of Aei4eiA.
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