Examine Importance Of Performance Management Systems Business Essay

The report is designed to examine need for Performance Management system in itself whose concept has been elaborated, discussed and the details of the purposes of performance management that are strategic goal, developmental goal, administrative purposes have been described in depth and the operations contained in the system have been described in the statement. Moving on to explaining the criteria for measuring performance have been talked about which are proper congruence, validity, consistency, acceptability, and specificity. The stated standards have been found very important to implementation even in modern day business organisations. Another part of the survey mentions about the implementation of the performance management system in detail has been ventured into and later the resources of information used to adequately measure the performance of sales assistance in the selected business which is Telstra tele-sales and outbound sales sector moving onto examination of fairness of evaluation of performance management is performed in this portion of the record. Concluding with the importance of the performance management system and the execution of the same in every organisation seeking progress and success in any said sector and the importance of purposes of performance management have been mentioned with the advice like Telstra can devise training programs even for the employees who are below expectation level. The recruiting process can become more stringent never to let employees who do unfit the business to be appointed as it would reduce cost to the company. The company can evaluate the customer's needs every once in awhile with constant feedback from the consumers and also with surveys. If the associates after confirming the underperformers can raise the motivation levels of co-workers and seek ways to teach them it'll reduce the work of professionals while analysis. Bench marking must be achieved with other competitive organisations on the market on a regular basis. Key performance indications need to be introduced within the system for evaluation of the employee performance.


Purpose of the record: The statement is intended to report the discourse at a discussion where performance management covering the regions of strategy, development and supervision have been concentrated upon. The primary aim of the commentary is to suggest impressive ideas to increase the performance management system linking employee activities with the organisational goals. The analysis aspires to discuss standard purposes of performance management and effective system to be followed in contemporary business organisations.

Scope: The info in the statement ranges from evaluating the concept of performance management and the value of the same in virtually any organisation while wanting to closely see various functions and elaborate the periods such as recruiting, induction, training and development. The survey would also discuss about performance management stages like reviews of employees. Both for and against arguments of any performance management system in modern business organisations in Australia have been discussed in the information.

Background: The qualifications of the survey will be the observations of your Human Resource Supervisor after participating in a discussion where performance management within the regions of strategy, development and supervision has been reviewed. Suggestions for enhancing the performance management system linking employee activities with the organisational goals have been devised in the commentary. Situations being frequent that many businesses are forming strategies to take care of worker's performance in Australia.

Limitations: The report is constrained to consider that research of current situation n Australia uncovers that many firms are forming ways of deal with worker's performance and that the improvement in performance management system should link worker activities with the organisational goals. Also that only three general purposes of performance management and criteria for effective performance management systems which can be adopted in contemporary business organisations have been conversed.

2. Performance Management System

According to Jong & Hartog (2007), Performance Management is an activity that enables an organisation to evaluate and continually improve individual, subsidiary device and commercial performance, against obviously defined, pre-set goals and focuses on. There is a very important link between performance management strategies applied to individuals or products which donate to the organisation be it for global success. This linkage is also important as an individual's performance is assessed according to objectives of appropriate final results and behavior that donate to organizational goal attainment. Wilson (1995) advocates that, any matter would have to devise an efficient system for taking care of the performance of its global functions that assists strategic cohesion and competitiveness but additionally it is important to bear in mind not to impose onerous methods for the same invading the local receptiveness. Examining performance and making sure adherence to agreed benchmarks are key elements of an organisation's managerial control system.

Success of your company depends quite definitely on all the phases and must be reflected and reiterated in every stage ranging from job examination to attaining best results from one's performance which will indirectly donate to the company's performance. Schroeder & Ahmad (2002) identifies that, job research is the initial stage were in description of the job is devised and published for potential candidates be it external or internal recruitment directing to the level of hiring the correct person for the work. Basing the procedure on standards established by the company and the essentials type for in the new worker were in a -panel is usually included to help make the process successful also to scrutinize information on the progression and make sure the hiring adds value to the team and company. Selection is a very important stage of staffing as it emulates the company requirements, norms and major qualifications of the work which need to be type after in the candidate which should possibly appreciate triumph of the concern. Induction could be the first impression of the employee on the company standards were in the new joinee would get an overview of the matter, unveiled to the associates after elucidating the accomplishments and the expectations from the worker. Burke (1998) says that, training and employee development is a stage which can be revisited when required for the employee. Most of the companies seek for applicants with apt knowledge of the work not needing any formal training in to the information on the same. But every company could have its own way and panache of getting the job done. The staff would be taken through this info if required in the very beginning of the association with the company. This level is revisited for campaign purposes by the worker and made a mandate oftentimes as one would want in depth know-how of a job when going it. Employee development happens only when working out strategies are updated time to time and harmonized with the market customary and clientele requisites. Performance planning would be the main stage of the performance management system as the business would need to plan the same well in advance keeping their eye-sight as the base and devising something to well suits the business enterprise needs, organisational culture and job of the staff. Soltani (2003) argues that, the merit increase was highly distorted because market forces available had a larger effect on salary increase than merit.

3. Purposes of Performance Management

There are three varieties of purposes of performance management which is often described as below:

Strategic Purpose: Strategies are carried out through determining the results, actions and, somewhat, employee characteristics that are necessary for carrying out any particular strategy. The next measure is always to develop dimension and feedback systems that will exploit the amount to which employees display the characteristics, take part in the conducts and construct the outcome. To achieve this strategic purpose, the machine should be flexible since when goals and strategies change, the results, behaviors and employee individuality usually need to improve accordingly. Studies have revealed that to achieve their strategic purpose, effective performance management systems screen five characteristics which would be

Association of worker performance with organizational seeks.

Transparent enunciation of the preferred work culture.

Apparent dependence on the results and skills which would be the way the email address details are to be performed.

Management action and methods that encourage unrestricted effort

Developmental Goal: A next purpose of performance management is to develop employees who are productive at their work. In case the members of staff are not doing efficiently, performance management looks for to develop their performance. The comments given during performance evaluation process usually isolate the employee's brief falls. But the benefit of performance management which it not only identifies the short falls but also the causes of the problem for example a skill deficit, a motivational hitch or any hindrance having the worker from being successful. Managers are generally uncomfortable dealing using their performance issues. These confrontations are very necessary but eventually risk the work relations in the group. In case the manager provides high rankings to employees disregarding the flaws in them the relationships within the team are preserved but the only reason for devised performance management is not satisfied.

Administrative Goal: The information stimulated from performance management is frequently used for promotion, wage increase, salary management, devising retention and termination procedures and most important being an individual's performance recognition. It is discovered that in Australia many companies use information from performance appraisal for job development, prospective promotion position and also for training programs to be planned for individuals. Surprisingly many evaluators aren't comfortable going through the procedure of performance appraisal and end up rating both the performers and non performers either high or similarly which would make the performance appraisal information absolutely worthless.

The exclusive purposes of performance management system are to link employee activities with the firm's strategic aspirations, provide apt and helpful information for making organizational resolutions about labor force and to give the responses to them leading to their profession development. An important tread in performance management is to devise the means by which performance can be evaluated and measured.

3. Criteria of effective Performance Management:

The standards for effective performance management systems which can be adopted in modern business organisations even though many have differed view of the standards the main once can be outlined and categorised as tactical congruence, validity, trustworthiness, acceptability and specificity. The requirements can be described as under.

Strategic Congruence: It is the level to that your performance management system ingredients job performance that is corresponding with the organisation's goals, strategy and culture. For example if the company accentuates advancement, then the company's performance management system would examine how well are the employee's are being innovative with the products and services. This criterion emphasizes that the business's performance management system provides training and assist with the employees to allow them to contribute to the organisation's achievements which indicates that the system must be bendable enough to have the ability to dynamically change with the business's changing strategic good posture. The system, known as a well balanced scorecard, is a way of developing strategic congruence. It really is a method organisations can web page link their long-term technique to short-term actions and offer a way for the organisation to consistently improve and learn that can be achieved by having a spotlight on volume of departments of the company, such as financial, internal business operations, learning and expansion and translating the perspective. The balance scorecard is one way of signaling to the member of staff the particular organisation's seeks are for customers and shareholders. Every employee performance can be from the overall strategy by connected in three activities that are conversing and educating, setting goals and linking rewards to performance procedures.

Validity: This is actually the level to which the performance strategy assesses all the relevant and only the relevant portions of performance. Additionally it is known as 'content validity'. For this particular performance solution to be valid and productive for best results it should not be missing or grimy. A performance strategy would not yield the required results if it does not consider all the areas of performance. Say for example a performance solution system devised at a manufacturing facility considering only volume produced by the employees and overlooking the quality facet of the produce.

A grimy measure evaluates inappropriate areas of performance or aspects that not related to the work. The performance measure should look for ways to reduce the grimy parts but it is not possible to totally eliminate the short falls. Validity is concerned with increasing the overlap between actual job and performance and measure of job performance. For example level of produce would be high if the equipment being used is within good condition. Even if a particular staff is quite experienced in the field if the machinery provided for the job is not in best working conditions the produce wouldn't normally be on par with the other staff. Thus, to work with the numbers together would be to use a measure that is highly affected by things beyond the control of the average person employee.

Reliability: It related to stableness of the performance measure. An important type of reliability is inter-rater reliability: the stableness among the people who assess a employee's performance. A performance strategy has inter-rater trustworthiness if two individuals give the same or at least near to being same assessments of a person's job performance. A different type of reliability is inside consistency consistency. This relates to the amount to which a number of points measuring a particular parameter of performance, like quality, correlate with one another. Studies reveal that most individual supervisory procedures of job performance display low trustworthiness. With some options, the level to which every item ranked are internally consistent is important. On top of that, the strategy should be reliable over a period. A measure that results in greatly different ratings with respect to the time of which the options are used lacks test-retest stability. For instance if an employee's performance has been examined, employee's performance needs to be measured on the time frame but not limited to a month.

Acceptability: It pertains to the extent to which a performance measure is considered to be useful and acceptable or enough by those utilize it. Many very intricate performance measures are extremely valid and reliable nevertheless they consume so a lot of the evaluator's time that they drop to put it to use as well as the employee being examined do not acknowledge it. This solution is affected by the extent to which worker believes the performance management system being affordable.

Specificity: This strategy is the degree to which the performance measure provides particular information to employees about the organisation's prospects and the ways to meet them. This strategy is appropriate to both the strategic and developmental purposes of performance management. If any strategy does not identify the strategy to be performed by the worker to help the business achieve its strategic goals, it becomes difficult for the company to attain the strategic purpose. Also, if any performance management system does not point out the issues with an employee's performance it would not be possible to rectify them.

4. Execution of Performance Management System:

If the contemporary business organisations in Australia are taken for instance it's very much important that these organisations have a performance management system set up for the reason why like a performance management system as an activity is through which managers ensure that employee's activities and outputs are congruent with the organisation's goals. Performance management is essential to gain competitive move forward. Performance management system has five important parts: defining performance, facilitating performance, motivating performance, measuring performance and feeding back performance information. Implementation of performance management system could have the performance assessed of employees and will make method for better performance of the member resulting in better team performance resulting in best company performance. Performance management system will point out the short falls of any staff and will help the management devise ways to teach the staff on those lines for a better performance, on the other side if the employee is a wrong person in the right job it could help the management terminate the services of the worker saving funds of the organisation were in a more talented and a right person for the right job can be inducted. Alternatively there are few short falls of positioning a performance management system in modern business organisations like if the scorecard system is followed and is not yielding the correct information the appraisal area of the performance management system wouldn't normally supply the expected results and also if any worker is entrusted more responsibility than what you can perform the performance management system wouldn't normally capitulate the anticipated results. Another brief fall of the machine is the evaluators either giving same or equivalent ratings to all the employees or not giving an unbiased rating to all the employees by favoring one or few employees disregarding the other performers.

5. Analysis of performance:

Sources of performance information used to effectively evaluate the performance of sales assistance in an enterprise like Telstra's tele-sales or outbound sales sector of telephone relationships can be reviewed in the next manner. The sector of sales is one where constant and ongoing performance is necessary and necessary for the employee to be rated well and also for the company to make revenue and stay static in the business while having the ability to match the competition. The sources of performance information for the outbound sales sector would be the quantity of sales being first, accompanied by sources like the quantity of the deal item, revenue technology for the company, the call amounts made to the customer for the purpose of sales, the amount allocated to the travel which is determined by the customer's location, follow up on the order of customers, customer satisfaction on the sale, also the parameters like well balanced scorecard and key performer signals would also play a major role in the performance evaluation.

In the procedure of evaluating performance every evaluator would have to consider all all these resources for best results. Along all these evaluator points the procedure set up for an organisation interacting with outbound sales would also consider the specificity, dependability and acceptability variables of any performance management system while analyzing the performance of any employee. In such organisations a worker is entrusted with responsibility to sell the merchandise to customers by getting close them over the telephone, making a possible contact and prospectively making a deal with least follow ups possible, least amount of time spent, while supplying customer satisfaction, less amount spent on the idea of deal in the means of transportation, making a income to the company. While the staff is being analyzed for the performance the employee's previously listed tactics are measured and rated appropriately on the lines of performance for the intended purpose of either appraisal or normal performance evaluation and the staff who have constantly performed well on all these lines is given on a regular basis to keep carefully the spirits up and also to motivate the employee and also give drive to the worker who seek to make a symbol in the sector of the company. Such employees who are lacking in the skills required for the job are given enough training prior to the job and also if found to be needing training in the performance cycle and are assessed on a regular basis for improvement and brilliance in their performance. Ranking systems are accompanied by the evaluators and also peer responses is followed. Idea of 360 degree opinions is also accompanied by few organisations. Testa (2002) represents that, with manifold opinions, the 360 level process can also produce ambiguous and conflicting reviews, so employees may require assistance to interpret the results. Another concern is the fact peers may provide inflated rather than accurate thoughts and opinions to avoid conflicts. The problem of inflated ratings may be amplified in companies that let employees choose the individuals who will examine them. In spite of these short falls 360 level opinions has gained significant popularity. But for the organisation being considered above for analysis of sales performance all these method of taking feedback would work well being truly a contemporary business company. A performance management system would be a success if the business has employees doing work for one cause and one goal. If the recruiting level is supervised and completed keeping the goals and requirements of the organisation hiring individuals who are aligned with goals of the entity and are highly motivated for the same cause as is the company. Even if the company has employees dispersed all around the world belonging to various social backgrounds the system will be a triumph. The recruiting division would look for the features in alignment with their business requirements in the individuals to be hired. According to Mejia (2000), a successful candidate should be considered a contributing factor to the prevailing motivated employees whose qualities are well aligned with the aspirations mentioned in the business statement of the organisation. Also if the part of performance management and essential stage of appraisal, training and development are well organized in accordance with the business enterprise requirements keeping customer needs in mind it might be a success. Binsted (1980) suggests that, Training and development is an important level in the performance management as all the employees who are performers yet need some training to improve on the blind locations identified by the managers at the time of review are closed upon with sufficient and appropriately designed training programs. Well informed and skilled panel of professionals must be shaped as a team to devise current training programs which are well synchronized with current customer needs assisting the employees needing working out to close the gaps and also perform better. Also the professionals can contribute to the employees who lack the work knowhow performing improperly on one of the essentials of the company have to be used for a face-to-face action plan and cut back to team to overview their performance and retained a monitor for improvement. If found that there are any employees who are incorrect people in the incorrect job the managers are expected to consider necessary action to resolve the situation.

6. Fairness of Performance Management:

The reasonability of any performance management would rely on the purposes of performance management being used and satisfied. All the three purposes that are Strategic goal, Developmental goal, administrative purpose are essential for a performance management system to be a success also to be followed by the company. Strategies are integrated through determining the results, conducts and, somewhat, staff characteristics that are necessary to carry out any particular strategy. The next measure would be to develop measurement and reviews systems that will exploit the magnitude to which employees exhibit the characteristics, engage in the actions and construct the outcome. Purpose of performance management is to build up employees who are effective at their work. In the event the members of staff are not accomplishing effectively, performance management seeks to build up their performance. The comments given during performance analysis process usually isolate the employee's short falls. However the advantage of performance management so it not only identifies the short falls but also the sources of the issue for example a skill deficit, a motivational hitch or any hindrance possessing the worker from being productive. Level to that your performance management system ingredients job performance that is coordinating with the organisation's goals, strategy and culture. For example if a company accentuates invention, then your company's performance management system would determine how well are the employee's are being ground breaking with the merchandise and services. This criterion emphasizes that the company's performance management system provides training and assist with the employees to allow them to contribute to the organisation's accomplishments which in turn indicates that the machine needs to be bendable enough to be able to dynamically change with the company's changing strategic posture. The system, known as a healthy scorecard, is a way of developing tactical congruence.


Telstra can devise training programs even for the employees who are below expectation level.

The recruiting process can be more stringent never to let employees who do not fit the business to be employed as it would reduce cost to the business.

The company can measure the customer's needs every once in awhile with constant reviews from the consumers and also with studies.

If the associates after reporting the underperformers can increase the motivation levels of co-workers and seek ways to teach them it'll reduce the work of professionals while evaluation.

Bench marking needs to be done with other competitive organisations in the market on a continuous basis.

Key performance indications have to be introduced within the system for analysis of the staff performance.


In finale of the record the author wish to add that the purposes of performance management are very important for the success of system adopted in virtually any given organisation. The practices used in one company would establish the limitations of the success and also determine the improvement of the company. If organisations adjust such a performance management system they should be keen on religiously adding it into practice and reaping the results of the same. Every stage of the machine is equally important. Further to these observations we can also conclude that professionals in the organisation have a typical procedure to deal with issues regarding non performers in the system who are increasing cost to the company as well as the cataloguing done at performance review level is not a regular one but powerful and good constitution of the business.

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