Factors Impacting Performance Management Systems Business Essay

In order to achieve common acceptance of work potential clients, areas and opportunities that exist for the development of the employees as well as for the business by appraising performance final results, an evolving idea of performance management is on the rise. Performance management is a organized process that links means that permit organizations to foster a typical image related to the goals set by the business and in providing way to workers in order to comprehend and protect for both, individual as well as company's performance (Holton, 2002).

According to (Salem, 2003), performance management can be explained as a technique that is integrative and orderly for the purpose of enlightening organizational performance that stimulates a philosophy focused to the attainment of prepared aims, mission, eye-sight and ideas.

More accurately, it is concerned with evaluating the performance of workforces so that development can be carried in by relating suitable assessment and rewards for the attempts of the employees and by simplifying the stream of communication, enhancing learning potential clients and explicatory work engagements (Salem, 2003).


Lockett has underlined lots of performance management's goals. They are really the following

The main aim of performance management is to help the workforce of a business to accomplish higher benchmarks of carrying out their job duties.

Performance management enables the employees to improve the level of their current performance by authorizing, encouraging and performing an operative reward mechanism.

Facilitating smooth movement of communication so that potentials regarding assignments, tasks, confirming are simplified between your managers and the employees. It allows the communication of commercial, business and useful goals alongside providing a systematic and apparent judgment about performance of the worker.

Ensures constant supervision and instruction.

The key shoot for performance management is to identify and handle the obstacles that prevent effective performance. This can be done by way of providing instructions, effective governance, close monitoring and change interventions.

Building a groundwork for numerous organizational assessments deliberate agreements, succession planning, breakthroughs and rewards linked with performance.

Providing employees with the possibility to prosper by exploiting the opportunities that exist so as to achieve personal progress and improvement in their career (Lockett, 1992).


For performance management system to be implemented, there are a number of conditions that has to are present prior to its execution. These factors include

Ability of director to mobilize the organization.

Effectively connecting the roles, tasks and responsibilities of all such people who are the participants in the process of causing change.

Transparency and Simplicity

Practicality and Participation

Equality and Objectivity (Amatayakul, 2005).


In the views of Joseph R. Grima, performance management should be

Participative: Performance management is a two way process and must encourage the involvement of both supervisor and worker. This involvement should be there for creating objectives at the very start of evaluation period and by the end, evaluating results.

Task-oriented: Performance should be assessed on the basis of business goals and the final results, personal traits and pre-defined areas and targets.

Developmental: The procedure should be put in place not and then assess and rate employees but also to help the employees to boost their future job paths by using personal development and development. It should also identify the areas where staff needs further training (Grima, 2000).

It is essential for performance management system to be participative, task-oriented as well as developmental. If the performance management system of an organization doesn't provides the employees' opportunities to learn and develop when deficiencies from the results are determined, than such system is useless. The main focus of performance management is to identify and to treat vital people conditions that exist in an business. It leads towards building relationship with the folks employed by the organization. It creates a host or work setting that enables the employed visitors to best perform the abilities that they possess (Heathfield, 2012).


An integrated style of performance management is offered by (Thomas G. Cummings C. G. , 2005).

(Thomas G. Cummings C. G. , 2005) pg #421.

For effective implementation of performance management, it's important to consider three appropriate factors which exist in the larger organizational point of view and influences performance organization large. These factors include

Business Strategy: It includes internal and external environment within which the company operates. In addition, it includes those policies, procedures, strategies, goals, environment that permits an organization to be competitive in the most successful manner and the focus that organization is wearing effective performance of its employees.

Workplace Technology: Office technology has an enormous effect on performance of people and groups. This will depend upon whether the technology is high or low in interdependence. In the event technology is highly interdependent, work constructions are preferably made for work groups alternatively than individuals and performance management when this happens is targeted at work group patterns (Thomas G. Cummings C. G. , 2005).

Employee Involvement: Level of involvement depends upon the control that prevails in an firm varying from bureaucratic to adaptable. Organizations rigid control buttons discourage contribution and the setting of goals, appraisal of performance are formalized and inflexibly implemented by management. On the other hand, when organizations are supportive and flexible, contribution from employees is encouraged, sense of ownership raises and performance management becomes a two way process for employees as well as for the workplace (Thomas G. Cummings C. G. , 2005).


Goal environment specifies the appropriate level of performance. It is a two way process where worker and the employer establishes and gain knowledge of the goals arranged for the worker to achieve. Goal setting involves

Establishing challenging goals: An organization should established goals by motivating contribution from the employees, setting up challenging and clear goals that are specifically identified and practical (Thomas G. Cummings C. G. , 2005).

Clarifying goal dimension: If the goals place by the business are specific, each worker has a definite understanding of what is expected from him. However to achieve clearness in goal way of measuring, goals should be operationally described (Thomas G. Cummings C. G. , 2005).

Management by objectives: Yet another way of setting goals is by way of management by aims (MBO); focusing on position of personal goals with the business enterprise strategy by facilitating the flow of communication between the manager and the subordinate and by unification of issues where it is accessible(Thomas G. Cummings C. G. , 2005). . This process of MBO can be put in place by following a below described steps

Step1: Group along with specific goals is described and action strategies are developed for the success of the set goals.

Step2: Job tasks, duties and accountabilities are explained so the individual has a clear understanding of what is to be achieved and what not.

Step3: A plan of action for the execution of goals is set known as action blueprints.

Step4: At this time, the acceptable standards for success and performance are agreed upon between your administrator and the subordinate. This needs to be a two way process so a mutual understanding of goals and success standards is achieved.

Step5: Every once in awhile, director reviews the performance of the subordinate or in other words review the progress of the work assigned. This task can be divided into three sub-steps. First rung on the ladder is when the subordinate requires the effort to talk to the supervisor about the opportunities, hurdles, achievements achieved. Second step is when supervisor initiates a dialogue or meeting with the subordinate to go over about the work plans for future years. In the last step, training and analysis often takes place.

Step6: All of the documents related to goal setting, success criterion, priorities, rewards and payment dates are forwarded to a older management (Thomas G. Cummings C. G. , 2005).


Discussing and critiquing the performance of an employee in framework of the responsibilities and responsibilities given to him as part of his job. Appraisal is dependant on job performance rather than personal characteristics of an employee. It provides a worker with the chance of discovering areas that needs improvement and also directs as to what are the strengths to capitalize on and weaknesses to avoid (Lee, 2007).

Process of performance appraisal:

According to (Egan, 1995), the process of performance appraisal is really as follows

Establishing criteria: To start with step in performance appraisal process is to create standards based after which genuine and desired performance can be compared. For this function, the standards established should be simple, clear and measureable.

Communicating specifications: Standards established however, not well communicated will be useless. Thus it is essential that the employees must be communicated about the collection standards in order that they have an obvious idea as to what is expected of these (Egan, 1995).

Measuring genuine performance: This level along the way of performance appraisal is the most challenging because to quantify the level of actual performance is complicated. Appropriate way of measuring tools must be determined so the performance measured is objective and natural (Egan, 1995).

Comparing real with preferred performance: This assessment is important so that deviation from preferred performance is quantified. In the event the genuine performance is below the desired level, effect is negative deviation (Egan, 1995).

Discussing results: Upon checking the actual with the most well-liked performance, the consequence of the comparison whether it's positive or negative is communicated to the employee. Employer also compensates attention as to the reasons this deviation is taking place. At this time, pragmatic alternatives are identified and assessed with each employee separately (Egan, 1995).

Decision making: At this time, decision is made i. e. what must be done in order to increase the performance and what corrective activities need to be taken.

Performance appraisal must be steady, timely, exact and standard to users, focused on important control things and economically reasonable (Thomas G. Cummings C. G. , 2005).


The need for designing and applying incentive systems in organization is increasing at a rapid pace. It is a subject of common observation that when employee does a good job, they expect to receive some kind of reward in turn. Thus compensation system of any company performs an important role in motivating employees towards performance (Thomas G. Cummings C. G. , 2005). Pursuing are some of the praise systems

Job Centered: According to this system, pay framework is designed where salary schedules are decided according to the position range established upon responsibilities and tasks assigned. This system reduces the likelihood of possible biased pay techniques (Kokemuller, 2007).

Performance Based: It is important because of this kind of system to reach your goals, performance must be linked with the rewards that individuals receive such for good performances salary may increase, a benefit may be rewarded (Thomas J. Atchison, 2010).

Skill and Knowledge-Based Pay System: Relating to this system, employees must be rewarded according to the knowledge, skills and talents that they have got categorised as skills inventory. As employees are paid on this basis, it results in increased motivation, improved upon production, lower absenteeism and turnover (Paren, 1994).

Gain Writing Systems: That is a kind of remuneration. It provides a good deal for both employer as well as worker. Since employer are willing to negotiate discounts in terms of better performance and employees are prepared to negotiate bargains in terms of fair earnings for their attempts (Bowey, 2008).

Promotion Systems: This system enables employees to grow their position and acquire higher-status positions in the organization. Nowadays, open up job posting has turned into a norm and allows employees who believe in their capabilities to suggest their labels (Thomas G. Cummings C. G. , 2005).


At times the best considered performance management system is subject to collapse if it's improperly managed. Fraser has provided a number of suggestions for improving the performance management system and is really as follows

An article for the purpose of inside affairs such as an internal manual should be produced that explains the PM system and must be done on constant basis.

The employees must have a specific idea as to how PM system works and must be able to understand its connection with their individual performance.

In order to bring in efficiency and also to avoid potential biases, older management should be trained in this regard.

Good performance should be registered in a formal doc and be compensated accordingly. Alternatively, poor performance should be saved and opportunities to boost must be offered alongside monitoring whether increased performance is evident or not.

Key performance indicators should be developed that are simple and clear to the employees. Most importantly, organizations should avoid producing way too many key performance indicators otherwise the focus on important issues can be abstracted (Fraser, 2007).


With reference to all these options, we can conclude that the built in procedure for performance management seeks to identify, assess and strengthen worker work manners and outcomes. Involvement of the employees of the business is crucial to make the performance management system successful. Goal setting, performance appraisal and prize systems form area of the performance management system. Organizations who don't point out on the effectiveness of performance management system does not understand the value of employee involvement and all those benefits causing for the employer as well for the employee. For the company to be always a success in the long run, a well designed and carried out performance management system should can be found in the organization.

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